The ratepayer backlash to data center expansion is here

Your The electricity bill goes up. Of course people are angry about it and look around to see who is responsible for it. But it's not a who, but a what – and the recent AI-driven data center construction wave is at least partly the reason why.

Numerous data centers have sprung up almost across the United States Doubling the number between 2021 and 2024, and there is no end in sight to their rapid spread. Companies are expected to spend, according to consulting firm McKinsey & Company $1.6 trillion for data center hardware in the USA by 2030.

It's not just the existing facilities that are causing higher bills; Even data centers that have yet to be built are driving up electricity prices today.

These imposing, almost windowless, flat-walled buildings are full of processors, hard drives and memory chips that devour electrons. Today, some of the world's largest technology companies are vying to secure more computing assets and the energy to power them as they fight to dominate the AI ​​sector. BloombergNEF, an energy research firm, estimates that data centers will do this consume more than double their current share of electricity by 2035, which will account for nearly 9 percent of total U.S. electricity demand. The U.S. Department of Energy predicted last year that data centers could cost more than $500,000 12 percent of the country's total electricity needs Production as early as 2028.

“Large loads have always existed, but they have tended to be much smaller. A large load could be 10 to 50 megawatts,” said Pieter Mul, associate partner at PA Consulting. “Data centers now consume hundreds of megawatts at a time.”

“There is a huge mismatch not only between the willingness to pay, but also the speed and volume at which these data centers want to be connected,” he added. “The speed is well beyond the capacity of the supply to meet this load.”

And this disproportion is a recipe for rising electricity prices.

Last week, the Maryland state legislative representative for utility customers sent a letter to your regional network operator, PJMand called on them to stop the “land rush” for electricity from data centers that is driving up household electricity bills.

Marylanders are becoming increasingly dissatisfied with their electric bills, and this demand represents a significant escalation in the consumer backlash against the tech industry's rapid expansion of its footprint.

Maryland ratepayers, like most of us, are paying for data center expansion

Maryland ratepayer advocates ultimately pushed back after an auction earlier this year for power capacity to meet peak demand in the PJM area new record priceand is therefore 22 percent above the previous high. And they are already starting to grow monthly bills around $16.

PJM is an important part of the US energy system. It is the largest electric grid operator in the United States 67 million people in 13 states and Washington, DC. And it's also a global hotspot for this expanding technology. The grid includes Loudoun County, Virginia, home of almost 200 data centers – the largest hyperscale data center market in the world.

Utilities tell PJM they expect data centers to demand even more power. According to Maryland's Office of People's Counsel, PJM's forecast for load growth through 2030 has nearly doubled compared to the previous forecast. The costs of building the infrastructure to support these new data centers are already being factored into electricity prices, even in places that have barely benefited from the race for more computing power.

“This is completely unfair,” said David Lapp, who serves as Maryland’s people’s counsel. “All the laws and regulations we have are designed for a completely different scale and scale of growth and demand for electricity, so we are essentially dealing with outdated rules.”

Lapp explained that technology companies look for cheap electricity prices from various energy suppliers and try to buy as much electricity as possible at low prices. These utilities, in turn, tell grid operators like PJM how much electricity they will need in the future. The mere speculation about future increases in energy demand triggers a battle for electricity, which is already reflected in higher prices for the average citizen.

However, it is unlikely that all of these data centers will be built, especially if this is the case The AI ​​boom turns out to be a bubble or when companies consolidate. Some tech companies may also solicit power bids from multiple utilities for the same data center, so there may also be double metering that drives up demand forecasts. And even the facilities that are built may not need all the power they need as computer hardware becomes more efficient.

This all means that ordinary households will end up picking up the tab for the new power generators and transmission lines designed to meet data center needs that may never arise.

And all of this could be very expensive for the average person. In other energy markets with many new data centers in recent years – places like Phoenix And Chicago — monthly wholesale electricity prices rose by 267 percent.

Can energy speculation in the data center sector be curbed?

By raising alarm that forecasts of future energy demand are now making things more expensive, Lapp hopes to begin the process of introducing reforms in the PJM to keep prices under control.

In an emailed statement, PJM spokesman Jeffrey Shields told Vox that the carrier agreed that it was critical to get the most accurate picture of demand growth. Unfortunately, this is a difficult thing. PJM does not interact directly with electricity customers. That's the job of utilities, and they have to be the ones to monitor how much power their users actually need.

For its part, PJM is working on ways to get a clearer picture of the future, including by requiring data center developers to disclose the full scope of their projects in multiple areas and developing a more thorough vetting process for requests for more power.

Once online, data centers can actually be a Blessing for the power grid. They are also ratepayers, and their bills can begin to cover the cost of new infrastructure, which can increase reliability across the network. Data centers don't necessarily need to be running at full speed all the time, and many are equipped with their own backup power systems so they can be optimized to operate when power is particularly cheap, helping to make the grid more stable overall. Some tech companies also build their own generators to keep their giant boxes running. But that's only possible if they are built at all.

“When [data centers] “When someone goes online, they will do their part by paying for the system,” Lapp said. “But if half of them don’t come online, there will be a lot of costs.” … These costs are passed on to existing customers, so existing customers are taking a lot of risk with these forecasts.”

However, there is an important way to reduce electricity bills for the common man. Julia Kortrey, deputy director of state policy at Evergreen Action, a climate policy advocacy group, said one way to curb electricity speculation is to force tech companies to get more involved in the game.

“We can provide incentives, such as requiring data center developers to make a down payment or a financial commitment,” Kortrey said. “This would help reduce the number of duplicate proposals or over-speculation.” Shields, the PJM spokesman, said the grid operator is working on recommendations for utilities to “require financial commitments from heavy-duty customers based on the additional capacity that PJM needs to purchase on their behalf.”

Consumer electricity prices are still expected to rise and more power-consuming data centers will emerge, but curbing rampant speculation about future demand could make electricity bills more manageable.

Otherwise, rising energy prices will place an even greater burden on the economy and more people will struggle to keep the lights on.