Electric bill may be paying for big data centers' energy use

Summary

In the race to develop artificial intelligence, large technology companies such as Google and Meta are trying to secure massive amounts of electricity to power new data centers. Electric utilities see the prospect of earning large profits by providing electricity to these power-hungry facilities and are competing for their business by offering discounts not available to average consumers. In our paper Extracting Profits from the Public, we explain how utilities are forcing regular ratepayers to pay for the discounts enjoyed by some of the nation’s largest companies and identify ways policymakers can limit the costs to the public. Shifting costs In much of the U.S., utilities are monopolists. Within their service territories, they are the only companies allowed to deliver electricity to consumers. To fund their operations, utilities split the costs of maintaining and expanding their systems among all ratepayers – homeowners, businesses, warehouses, factories and anyone else who uses electricity. Historically, a utility expanded its system to meet growing demand for electricity from new factories, businesses and homes. To pay for its expansion − new power plants, new transmission lines and other equipment − the utility would propose to raise electricity rates by different amounts for various types of consumers. Public utility commissions are state agencies charged with ensuring that the public gets a fair deal. These commissions monitor how much money the utility spends to provide electric service and how its costs are shared among various types of ratepayers, including residential, commercial and industrial consumers. Ultimately, the public utility commission is supposed to approve any rate increases based on its assessment of what’s fair to consumers. Splitting the utility’s costs among all consumers made perfect sense when population growth and economic development across the economy stimulated the need for new infrastructure. But today, in many utility service ter...