Are Data Centers Raising America's Electricity Prices? (cnbc.com) 71
Residential utility bills in America "rose 6% on average nationwide in August compared with the same period in the previous year," reports CNBC, citing statistics from the U.S. Energy Information Administration:
The reasons for price increases are often complex and vary by region. But in at least three states with high concentrations of data centers, electric bills climbed much faster than the national average during that period. Prices, for example, surged by 13% in Virginia, 16% in Illinois and 12% in Ohio.
The tech companies and AI labs are building data centers that consume a gigawatt or more of electricity in some cases, equivalent to more than 800,000 homes, the size of a city essentially... "The techlash is real," said Abraham Silverman, who served as general counsel for New Jersey's public utility board from 2019 until 2023 under outgoing Democratic Gov. Phil Murphy. "Data centers aren't always great neighbors," said Silverman, now a researcher at Johns Hopkins University. "They tend to be loud, they can be dirty and there's a number of communities, particularly in places with really high concentrations of data centers, that just don't want more data centers..." [C]apacity prices get passed down to consumers in their utility bills, Silverman said. The data center load in PJM [America's largest grid, serving 13 states] is also impacting prices in states that are not industry leaders such as New Jersey, where prices jumped about 20% year over year...
There are other reasons for rising electricity prices, Silverman said. The aging electric grid needs upgrades at a time of broad inflation and the cost of building new transmission lines has gone up by double digits, he said. The utilities also point to rising demand from the expansion of domestic manufacturing and the broader electrification of the economy, such as electric vehicles and the adoption of electric heat pumps in some regions...
In other states, however, the relationship between rising electricity prices and data centers is less clear. Texas, for example, is second only to Virginia with more than 400 data centers. But prices in the Lone Star state increased about 4% year over year in August, lower than the national average. Texas operates its own grid, ERCOT, with a relatively fast process that can connect new electric supply to the grid in around three years, according to a February 2024 report from the Brattle Group. California, meanwhile, has the third most data centers in the nation and the second highest residential electricity prices, nearly 80% above the national average. But prices in the Golden State increased about 1% in August 2024 over the prior year period, far below the average hike nationwide. One of the reasons California's electricity rates are so much higher than most of the country is the costs associated with preventing wildfires.
The tech companies and AI labs are building data centers that consume a gigawatt or more of electricity in some cases, equivalent to more than 800,000 homes, the size of a city essentially... "The techlash is real," said Abraham Silverman, who served as general counsel for New Jersey's public utility board from 2019 until 2023 under outgoing Democratic Gov. Phil Murphy. "Data centers aren't always great neighbors," said Silverman, now a researcher at Johns Hopkins University. "They tend to be loud, they can be dirty and there's a number of communities, particularly in places with really high concentrations of data centers, that just don't want more data centers..." [C]apacity prices get passed down to consumers in their utility bills, Silverman said. The data center load in PJM [America's largest grid, serving 13 states] is also impacting prices in states that are not industry leaders such as New Jersey, where prices jumped about 20% year over year...
There are other reasons for rising electricity prices, Silverman said. The aging electric grid needs upgrades at a time of broad inflation and the cost of building new transmission lines has gone up by double digits, he said. The utilities also point to rising demand from the expansion of domestic manufacturing and the broader electrification of the economy, such as electric vehicles and the adoption of electric heat pumps in some regions...
In other states, however, the relationship between rising electricity prices and data centers is less clear. Texas, for example, is second only to Virginia with more than 400 data centers. But prices in the Lone Star state increased about 4% year over year in August, lower than the national average. Texas operates its own grid, ERCOT, with a relatively fast process that can connect new electric supply to the grid in around three years, according to a February 2024 report from the Brattle Group. California, meanwhile, has the third most data centers in the nation and the second highest residential electricity prices, nearly 80% above the national average. But prices in the Golden State increased about 1% in August 2024 over the prior year period, far below the average hike nationwide. One of the reasons California's electricity rates are so much higher than most of the country is the costs associated with preventing wildfires.
No! But Greed Is. (Score:3, Informative)
My local utility has seen fit to increase rates 60% in the last two years and another rate hike set to begin January 1.
There are no AI data centers in my state. But there are greedy power monopolies.
Re:No! But Greed Is. (Score:5, Interesting)
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Depending on the state, data centers in other states can still impact your prices. A lot of power is traded on inter state markets, so local companies might be selling more of their power or it is more expensive for them to buy others... but also, the various inputs (fuel and specialized equipment) are also seeing a jump in price as demand for those increase too.
Yep, any increase in demand is going to affect prices even if it's not in your location as costs for supply will increase. This increases for everyone not just the people next to datacentres.
Not that the OP didn't also have a valid point.
Re: No! But Greed Is. (Score:1)
Just like with oil, what if electricity supply far exceeds demand, exemplified by the Sankey energy diagram for hydro-powered Washington state, which shows rejected electrical energy as far higher than the hydropower plant efficiency should produce, unless electricity is vastly overproduced, as the BPA generation graphs for Wa show, and rising rates are set by commissions listening to lobbyists, rather than by supply and demand?
https://flowcharts.llnl.gov/si... [llnl.gov]
https://transmission.bpa.gov/B... [bpa.gov]
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It doesn't have to be a zero-sum game but it is. It is extremely hard to get the billionaires to allow us to spend any money on infrastructure. They do it begrudgingly and in exchange for huge amounts of free money. The last major push for infrastructure in America was in the mid 1980s when the Democrat party compromised with Ronald Reagan giving Reagan all the military spending he wanted in exchange for 1 trillion d
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You vote for people on this board in local elections
You have a resolution path, its up to you and your fellow citizens.
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Yep. I play a game and ask people who their State Reps are. VAST majority of people have no idea.
You get the government competence proportional to your involvement in it.
Same with HOAs. People scream about them but literally never attend the meetings or bother to stand for election themselves.
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Another thing that isn't is "socializing the costs, privatizing the profits". There are no private profits under Soci
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Another good reason to invest in solar. The more energy you generate yourself, the less you are beholden to whatever they want to charge you for it.
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And trucks should be forced to us an entirely different set of roads.
Your idea is an entirely different kind of stupid. Most electrical grids are a hugely expensive piece of infrastructure.
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OK for one, like the roads network, homes and offices couldn't pay for the electricity grid without industrial loads (which includes datacenter). The roads you drive on are paid for by registration and gas taxes, which 80% come from semi trucks. So let's get over this "they are costing us money".
Wear on roads goes up according to the fourth power of the vehicle weight. https://en.wikipedia.org/wiki/... [wikipedia.org]
So the wear and tear caused to a road by cars is tiny compared to that caused by heavy trucks.
Gas taxes and vehicle registration don't cover 100% of the cost of highway maintenance in the US anyway, the government has to keep dipping into general funds from other tax revenue: https://en.wikipedia.org/wiki/... [wikipedia.org]
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It probably makes more sense given their scale for them to have their own power generation -- solar, wind, and battery storage, maybe gas turbines for extended periods of low renewable availability.
In fact, you could take it further. You could designate town-sized areas for multiple companies' data centers, served by an electricity source (possibly nuclear) and water reclamation and recycling centers providing zero carbon emissions and minimal environmental impact. It would be served by a compact, robust,
The Law (Score:2)
Although there will be regional pockets and special cases where it doesn't happen, anyone who even has 1% faith in the law of supply and demand will come to that conclusion.
It wouldn't happen, for example, if large data centers were all required to provide their own sustainable power. Otherwise, price rise is inevitable.
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Re: The Law (Score:1)
How does your faith deal with extraordinary evidence of electricity overgeneration, such as the consumption and production graphs on eia.gov's energy facts page?
https://www.eia.gov/energyexpl... [eia.gov]
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Amusingly, the article discusses politicians using electric prices as election issues, but often when the office they were running for had no authority over the matter. Virginia's SCC (their utility regulator) has its members appointed by the State legisl
The answer is always market distortions (Score:1, Troll)
If prices are rising, the return on investment to build out more generating capacity also rises.
Now let's ask: what added costs are discouraging that investment?
What prevents things like new power plants from being built?
Hint: it's closely related to the reason many power plants are actively being shut down.
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Sure, just go ahead and disconnect your home's power for the month since the price is too high and reconnect when it drops.
People's homes and businesses require electricity to operate, they don't really have a choice so the market is distorted by it's very nature, it's incredibly in-elastic.
Re: The answer is always market distortions (Score:2, Informative)
Again: if the market is inelastic and prices are rising, that's an incentive for new entrants into the market.
What is preventing new entrants from building power plants and connecting them to the grid?
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Re: The answer is always market distortions (Score:5, Interesting)
if the market is inelastic and prices are rising
Then there isn't sufficient regulation to maintain prices for those necessary consumers. People cannot choose to walk away from the purchase of electricity so what is supposed to insulate them when someone is willing to pay for for a limited resource. If it's just simple supply and demand well you can go sell that concept to your neighbors as we talk about an article about rising prices.
What is preventing new entrants from building power plants and connecting them to the grid?
Depends, for wind and solar it's been doing exactly what you want, expanding with tons of investment because there is demand. Biden of course cleared lot's of regulations and provided incentives and now that's being pulled back.
For NG it's a lack of turbine capacity, wait time is like 5+ years. Not all markets can respond immediately and then they have to counterbalance that the market in 5+ years may not look like it does today.
For nuclear it's doing alright in non-USA countries, in the USA it's a decades long lack of government investment and involvement. You would say it's just those pesky regulations, and that's not wrong but neither am I. The most government expansion of nuclear in the US was 1950-70 when the AEC was around and driving the ship. Everywhere else in the world building nuclear is doing it with state power. Half the US government doesn't believe that exists so, no nuclear power.
For coal it's the fact that it's poison-pumping into the environment and we've never had a mechanism to price that in. Why should we tolerate burning coal in 2025 instead of just telling the data centers "no".
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What is preventing new entrants from building power plants and connecting them to the grid?
If you're talking about nuclear power plants while carefully actually saying it, then the main thing is the lead in time as a direct concern and the doubt and uncertainty caused by that lead in time as a second order concern and also the sheer expense as another primary concern.
Re: The answer is always market distortions (Score:1, Insightful)
"Risk and concern" is a euphemism for too many busybodies with too much time on their hands having standing in court to challenge permits.
You can fix this in legislation by taking away people's standing to sue when they are not directly affected and explicitly define "directly affected" to exclude bullshit hypotheticals.
Of course this would solve the problem and thus take away opportunities for rentseeking and grandstanding. So we can't have that.
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"Risk and concern" is a euphemism for too many busybodies with too much time on their hands having standing in court to challenge permits.
This has nothing to do with my post. The only risks or concerns I considered were the ones investors would have about whether they would get a return on their investment.
You can fix this in legislation by taking away people's standing to sue when they are not directly affected and explicitly define "directly affected" to exclude bullshit hypotheticals.
Ah yes. No "bullshit hypotheticals". Clear and concise legal language every legal scholar can get behind. (for those immune to irony, put a big mental sarcasm tag around that)
Re: The answer is always market distortions (Score:1)
Clear and concise legal language
Have you actually seen the kind of verbiage that makes it into real, on-the-books legislation?
If you had, you'd probably want to put some sarc tags around your sarc tags.
Bullshit hypotheticals have standing in court precisely because of vaguely worded legislation that delegates a lot of authority to determine what counts as negative impact onto regulatory agencies or the court system.
Clear and concise language to dilineate what does and does not count as harm and what level of evidence and confidence is req
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Have you actually seen the kind of verbiage that makes it into real, on-the-books legislation?
I have and, while we seem to agree that it is often a horrible, mangled mess, I am not sure we will see eye to eye on the causes. One of them certainly is from people who don't really understand the issues that the law deals with due to those people who think that language like "no bullshit hypotheticals" is clear and concise. What those people need to understand is whatever they may think a "bullshit hypothetical" is may very well be disagreed with, including by people who are experts in the field with a g
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As RossCWilliams pointed out, this is obviously not an example of natural market forces since this is a public project. The argument about property values also seems a bit dubious and like it may be just your opinion. You might have to cite some evidence of that.
The biggest problem I have with your post though is that, yet again, it has nothing whatsoever to do with what I originally posted about. Mea culpa I guess for not doggedly re-iterating my previous point over and over again in every post and naively
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A lot to unpack with your post as usual. I am just going to try to avoid the usual deep thread with novella length posts and just point that:
Second, the people building the power plants have a pretty good idea on where electricity will be needed in the next 5 to 10 years and so will plan out a nuclear power plant in these places.
seems to be at odds with TFA. Part of the whole point is that five years ago, the additional power that these AI centers demand was not on the radar. We also do not know if that demand will still be there five years from now. The chips could double or triple in power efficiency. The algorithms? Those could become hundreds or thousands of times more efficient. The whole
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you joke but we did exactly this with our gas service. I noticed in the summer that literally 2/3 of our bill was fees, with only a gas water heater running.
Put in a heat pump hot water heater and turned off the gas from March/April to Oct/Nov. They really aren't used to people cancelling service lol.
NOT always market distortions (Score:5, Interesting)
There are three separate issues that cause this problem.
1) Distribution costs. Power is used up in sending it long distances. In addition, the infrastructure to distribute power is both expensive and limited. We need to build more power lines as well as power plants. Takes time.
2) Most types of power plants have severe limitations. Some cause pollution, some incur fear of radiation, some are intermittent, some are dependent on physical features and a good water supply. It is NOT a market distortion to deal with these issues, it is the free market reacting to various different concerns besides power.
In general, the best solution is to design industrial centers that contain both a power plant and a bunch of businesses in areas chosen for the benefit to that type of power plant. You could build a data center in a high solar area with a built in power bank that lasts the night.
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Nobody expects the Spanish Inquisition... (Or a well designed industrial/commercial center...)
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Because many of the parts are made in China so they are no longer cheap, and because much of our labor force has been deported!
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If prices are rising, the return on investment to build out more generating capacity also rises.
Slight correction: "If revenue is rising ..." Even at the same price per KWh, utilities are better off if their systems are loaded right up to 100% capacity, 7x24. Residential and most business customers don't do this. Industrial customers and data centers come closer.
What _WILL_ cause our prices to go through the roof is when all these AI services fold and close up shop. Then, all the grid investments will have to be paid for by somebody. And that somebody will be the last person to unplug their toaster.
America's electricy prices compared to whose? (Score:1)
So far no mention of the Chinese elephant in the room? Also curious about the European situation. Or should I report on the increasingly bleak Japanese situation as regards electricity supplies?
One thing about renewable power like solar and wind is that you may have "free" excess capacity just because the sun is shining and the wind is blowing. For a lot of the AI training stuff, that can be scheduled when the power is available and thus lower the electricity demand from the data centers for AI training...
Re: America's electricy prices compared to whose? (Score:2)
One thing about having a shortage of chips is you're gonna power them as close to 100% of the time as you can, regardless of power costs and blend.
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Your grasp of economics is so deep.
So how would you like to buy a nice bridge? Only slightly used by a little old lady who crossed it to go to church on Sundays.
You remind me of a CFO I used to work with. Harvard MBA, so he must have been a genius. Can't understand how the company went bankrupt. I'm sure there was no causal link, but I had left long before that... I got too tired of taking care of problems that had been omitted from the business plan...
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See other reply.
Yes (Score:1)
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I live here too. Did you vote for the PSC members earlier this month? The guy who got prices frozen lost his seat to someone who wants to increase prices.
Of course (Score:2)
These companies aren’t stupid. Pay a few lobbyists and the taxpayers will burden the costs.
Worse? (Score:2)
how are data centers "dirty"? (Score:2)
Serious question.
I get that they can be noisy (although to me that feels like lazy/weak zoning regulations, because sound mitigation in that context isn't really even hard) but I don't understand how they can be "dirty" implying local pollution or particulates.
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...but I don't understand how they can be "dirty" implying local pollution or particulates.
As an example, there's xAI's gas turbine powered data center in Memphis. The company naturally took a build now/ permit later approach to essentially building their own power plant, as one does. That lead to plenty of complaints from neighbors, of course. Of course, the government naturally sided with the scofflaw big corporation instead of the residents... as one does.
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"The company naturally took a build now/ permit later approach to essentially building their own power plant, as one does."
I live in MN. We were building a coating plant here in the late 1990s and it involved a thermal system to burn away solvents that escaped from our coating process (we're a EU firm, and have been recycling this back into power for our dryers for years reducing solvent emissions to basically 0) so I was heavily involved with the MN PCA and EPA who (surprisingly) had no algorithms to comp
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Doesn't your example VERY SPECIFICALLY support my point that this isn't so much an issue about the data center but about the lax implementation of basic regulation and zoning limits that the could do so and even survive the regulatory consequence?
??? Maybe that's your point in another comment in another thread. In _this_ thread, all you said was that "I don't understand how they can be "dirty" implying local pollution or particulates." The parts about zoning and regulation were about noise. If we must though, the regulations themselves explicitly do not allow this. The data center is simply breaking the law. It certainly can be argued that the local and federal government are not doing their job in enforcing the actual regulations.
Regardless, the an
Re:how are data centers "dirty"? (Score:4, Informative)
"Dirty" can come in many forms. Saw a documentary on them not too long ago.
* Noise of generators and cooling systems, the DC being built too close to existing homes, more of a zoning council fail but it happens as DC money can make the council turn a blind eye to the local residents desires.
* Vibration, lots of big engines and such can create vibrations that travel thru the ground (or very low frequency) that can disturb sleep and such even if it doesn't measure on the sound meter.
* Diesel exhaust if that's used for generators.
* Water supplies can be consumed (& denied to locals) or even "contaminated" (like being warmed too much for the local wildlife), or aquifers can be drained faster than they can replenish.
* Electricity as this article is about
* Dropping local property values of existing homes
* Taxation issues because cities want to bring the DC in and give tax abatements, but there are still local services required so the extra costs get passed on to others
They don't really bring all that many jobs, but city leadership trying to "diversify" seem want to bring them in. My personal opinion is to put them at least 5 miles from anything else, they can all build together, do their own power plant just for them, and figure out how to do water as long as they don't draw from an aquifer (maybe build their own lake or draw from the ocean).
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But in that sense we're getting into semantic hairsplitting. "Annoying" != "dirty"
To your points:
* Noise of generators and cooling systems, the DC being built too close to existing homes, more of a zoning council fail but it happens as DC money can make the council turn a blind eye to the local residents desires.
Zoning issue, as I mentioned.
* Vibration, lots of big engines and such can create vibrations that travel thru the ground (or very low frequency) that can disturb sleep and such even if it doesn't m
Will ChatGPT get the formatting right? (Score:1)
Here is a plain-ASCII, Slashdot-style comment with **no Unicode**, **no baiting**, **no fancy characters**, and **your requested point about how decoupling subverts supply-and-demand theory and connects to Fischer Black**.
You can paste this directly into Slashdot.
---
**Comment**
A big factor people overlook in rising electricity rates is the spread of "decoupling" policies. Decoupling breaks the traditional link between how much electricity a utility sells and how much revenue it earns. Regulators set a fixed
Not just wildfires (Score:2)
Attributing California's high prices to wildfires is misleading. Following deregulation in the 1990s, the utilities realized they could boost profits if they didn't "waste" money on routine maintenance. They cut back spending and let the grid decay. Eventually it started igniting fires and killing people. By that point, the money they had siphoned off to give to investors was long gone. The people were stuck paying to rebuild the grid after years of mismanagement.
So yes, there's a connection to wildfir
Re: Not just wildfires (Score:1)
"the money they had siphoned off to give to investors was long gone."
Really, or is it in Equity on the balance sheet still generating profits for pensions, dividends, and such?
If the utilities can hide enough money in complicated off-balance-sheet derivatives that regulators don't understand, can they lobby state regulators for higher rates, independent of oversupply conditions, all the while cynically selling a scarcity story to the ignorant general populace who have been indocttinated by mainstream econom
No no .. (Score:2)
" You all got it wrong .. prices for everything are going down .. 200 500 up to 1500 percent. Big reductions .. everything , i mean , you know it , we all know how bad it was .. no need to say how awfull it was , now you have prices lower than ever .. imagine .. gas is now 1.98, eggs are at a dollar .. never been lower .. people saying the price of electricity or gas or goods is going up is simply lying " /r
Yes, it's demand and supply (Score:2)
There only so much oil and hydel power to go around.
When demand ourpaces supply, prices go up
It depends... (Score:2)
And water rates aren't far behind for similar reasons.
So much for trickle-down voodoo economics.
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You're a fucking ignorant idiot. You don't have a clue what the words "socialism" and "communism" mean, or how they're different. Tell us, is Norway "communist"?