October 6, 2025 • 16 mins
AI needs a lot of energy — and a new Bloomberg investigation has found that those soaring costs are being passed on to consumers who live near data centers.
On today’s Big Take podcast, host David Gura talks to Bloomberg reporters Josh Saul and Leonardo Nicoletti about the AI boom’s impact on power bills, how utility companies are handling surging demand and the implications for communities with centers in their backyards.
Read more: AI Data Centers Are Sending Power Bills Soaring
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Episode Transcript
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Speaker 1 (00:00):
Hi, It's sucksh data centers for artificial intelligence consume huge
amounts of energy. They also happen to raise electricity prices
for people living close to those data centers. That's according
to an investigation from my colleagues's at Bloomberg News looking
at US data centers that you can hear about in
this episode of the Big Take podcast. Hope you find
(00:22):
it insightful. Zero will be back later this week with
a new episode.
Speaker 2 (00:29):
Bloomberg Audio Studios, Podcasts, Radio News. Hey, mister Stanley, how
you doing.
Speaker 3 (00:36):
I'm good, So I'm Josh who talked on the phone alright.
Speaker 4 (00:39):
Earlier this month, Bloomberg reporter Josh Saul visited a man
named Kevin Stanley. He's fifty seven and he lives in Baltimore.
Speaker 2 (00:47):
Do you'll need me to turn the lights on more?
Speaker 5 (00:48):
Because this time he.
Speaker 4 (00:51):
Josh was in Maryland to report on the effects that
data centers have on people who live near them. Kevin
lives about a two hour drive from an area known
as Data Center Alley, the world's largest concentration of data centers,
topping other hotspots like Iowa and Oregon, and Josh was
there to talk to him about one thing, in particular
(01:11):
his electricity bill, which has gone up ever since data
centers came to the region.
Speaker 2 (01:16):
Kevin's a really nice guy, really interesting guy, and he
talked about how his high power bills have had a
really rough effect on his life. He has had to
cut back on buying the groceries he likes, getting haircuts
as often as he likes. He tries to make his
diabetes medication stretch out.
Speaker 5 (01:30):
The power bills just keep going up and up, and
for me, I'm a single person in here, so I'm
like wow, like wow, the bill's going up so much.
Speaker 4 (01:40):
Kevin is blind and he lives on disability payments. He
says his energy bills are now eighty percent higher than
they were just about three years ago. And there were
days when the utility asks customers like him to use
less power to prevent blackouts or encourages them to use
less power to save money.
Speaker 5 (01:58):
They have days where they tell us, don't use any
electricity overrun air and dig but it's like ninety five degrees.
I'll done here.
Speaker 4 (02:07):
It can be difficult to pinpoint the exact root of
higher electricity bills and strain on the electrical grid, so
Josh set out to put some numbers to the growing
pressure data centers are putting on local power supply, and
he found that at a time of rapid data center
construction and investment in AI technology that needs them, demand
is driving up wholesale energy costs, and those costs are
(02:29):
being passed on to consumers.
Speaker 3 (02:31):
Josh spoke to some people that you know, started telling
him that their bills were really high.
Speaker 4 (02:36):
That's Leonardo Nicoletti, a data visualization reporter at Bloomberg who
traveled with Josh and crunched the numbers.
Speaker 3 (02:43):
When we were thinking about it, they seemed to be
living close to the hotspots of you know, AI data
centers in the United States. The main finding was that,
quite strikingly, if you are in an area that is
located close to data centers or data center activity, much
more likely to experience high price increases.
Speaker 2 (03:04):
The massive increase in the demand for AI and the
speed with which the data centers get bigger and bigger,
I think it's been a huge surprise to all of us.
Speaker 4 (03:17):
I'm David Gerrett, and this is the big take from
Bloomberg News today on the show, the staggering electricity needs
of AI data centers and how you yes, you could
end up putting the bill. AI needs a lot of
energy to work from summarized answers on Google to chat, GPT,
(03:38):
grocery lists. The rapidly growing technology requires massive amounts of
computing power, which requires a lot of actual power.
Speaker 3 (03:47):
We actually quantified this in an earlier story that Josh
and I worked together. We compared the total amount of
electricity that data centers use yearly to how much electricity
individual countries use, and we found that, for example, countries
like Italy or Australia are using actually less electricity as
a total than data centers use globally. And these numbers
(04:11):
are actually higher now because we did this, you know,
one year ago, and electricity demand is growing exponentially from
data centers.
Speaker 2 (04:19):
That numbers supposed to keep going up and up. So
Bloomberg and EF projects that it's supposed to be over
four percent by twenty thirty five of total global electricity consumption.
So if you took all the data centers at that
point and made them their own country, at that point,
they'd be the fourth biggest consumer of electricity after China,
the US, and India.
Speaker 4 (04:39):
But what Josh and Lao wanted to understand was whether
the huge demand for electricity was showing up on customers' bills.
Speaker 3 (04:46):
It took us like three months to find the data
because you know, it's actually really hard to get granular
data on power prices.
Speaker 4 (04:55):
To get that more granular picture, Layo and another Bloomberg
data visualization report or named Demetrius Podcas found a company
called grid Status that collects real time data for more
than twenty five thousand nodes around the US.
Speaker 3 (05:08):
A node is like the location on the grid, so
that's connected to transmission lines and it measures real time congestion,
real time fuel prices, and real time like supply costs,
things like that, right, and then the different factors that
are measured by that node then make up the price.
Speaker 4 (05:28):
With that data as well as data on the locations
and capacity of data centers from a company called dc Byte,
the reporters measured the distance between those nodes and areas
where there's significant data center activity. They use that to
create a data set that showed the price changes recorded
in those areas over time since twenty twenty.
Speaker 3 (05:47):
Essentially, the main finding is that seventy percent of nodes
that recorded price increases are located within fifty miles of
significant data center activity, and if.
Speaker 2 (05:58):
You look at your power bill, you're going to see
in most places a distribution charge. That's what you're paying
for all of the infrastructure, all the wires. But you're
also going to see a supply charge, and the supply
charge is what you're paying for that wholesale power. So
what lao's research says is by pushing up the price
of wholesale power, data centers are putting that upward pressure
on your power bill.
Speaker 4 (06:17):
So effectively, if I open up that bill, I'm not
going to see AI data centers as a line item,
but it's having that effect on what you're describing exactly.
Josh says there are two key mechanisms that drive up
electricity costs around data center hotspots.
Speaker 2 (06:33):
The first, to really summarize supply and demand, they use
a lot of electricity, which can make electricity more expensive
for everybody, so that's one way that can push up
customer bills. The other ways that they require a lot
of new infrastructure, mostly transmission lines, but also new power plants,
and the costs of building that are spread out among
all customers, including regular people like you.
Speaker 4 (06:53):
Monitoring Analytics is an outside watchdog that keeps an eye
on the largest US electric grid, PJM, is that data
center development raised costs for customers on pjm's grid, which
spans from Illinois to Washington, d C. By more than
nine point three billion dollars over a twelve month period
starting in June. Today, thirty three percent of all the
electricity used in Oregon is attributed to data centers. In Virginia,
(07:17):
it's thirty seven percent. That's according to data from dc
BYTE and the US Energy Information Agency. Communities in surrounding
areas are starting to do the math, and they're also
connecting higher bills to data centers.
Speaker 6 (07:30):
You don't have to see those data centers to see
the higher electric bills.
Speaker 4 (07:34):
That's David Lapp, a consumer advocate from the Maryland Office
of People's Council.
Speaker 6 (07:39):
We don't have in Maryland too many data centers, so
the costs are being driven up by data centers that
are out of state largely, and many of them in
northern Virginia.
Speaker 4 (07:48):
In February, the Baltimore City Council led a hearing on
the issue of rising Baltimore gas and electric bills.
Speaker 2 (07:56):
The current state of these BGE bills and the skyrocketing
rates is simply not sustainable for our constituents.
Speaker 4 (08:05):
And one of the people who spoke at the hearing
was Kevin Stanley, the man Josh and Laoe interviewed in Baltimore.
Speaker 5 (08:11):
Are you yes, good evening everyone. My name is Kevin Stanley.
Speaker 4 (08:16):
Kevin didn't know what was causing his bills to spike.
He just knew it was a problem.
Speaker 5 (08:20):
And there's no reason that Baltimore is should have the
excess of gas electric race.
Speaker 2 (08:26):
That they had.
Speaker 3 (08:27):
When Josh asked Kevin Stanley what he thought about data centers,
his reply.
Speaker 5 (08:32):
Was so they could say, oh, this is going to
help with AI. But how's that going to help me?
How's that going to help me pay up bill?
Speaker 4 (08:41):
So how do utilities decide who fronts the cost? And
how are those communities responding? That's after the break A
team of Bloomberg reporters dug into the rising costs of
electricity to see if the rapid construction of data centers
in some areas could be to blame, and they found
(09:04):
a link. Places with heightened data center activity were more
likely to see higher wholesale energy costs, meaning the presence
of data centers was raising power prices and eventually pushing
up customer bills. I asked Bloomberg reporter Josh Saul about
why that's happening when people usually expect to pay for
their own utility costs. I think about how I study
(09:26):
my electricity build with the extent that I do, and
maybe in the summer, I'm using my air conditioner more,
maybe in the winter I'm using my heat more. But
these are all kind of selfish things. I'm determining when
the bill goes up or down, why should I be
paying for the expenses of associated with these data centers.
Speaker 2 (09:43):
Well, I think there's two arguments that people make. I mean,
the first is that AI, whether you like it or not,
is becoming an increasingly large part of our world. So
from national security to the argument that we don't want
other countries to be way better at AI than we are,
to the fact that now our Google searches and even
our texts to our friends are guided by or instructed
(10:04):
by AI. So there's one argument there that we're all
using AI. And there's also an old utility law. The
way we do this is that the costs are shared
among everyone. So if you build a new house or
hook up to the grid. As a new business, you
don't pay for all of those costs to hook you up.
It's socialized among everyone on the grid. So utilities are
(10:24):
following that general principle. Now with these large new customers
data centers.
Speaker 4 (10:30):
It's tech companies that are deciding when and where to
build a new data center. Amazon, Microsoft, and Alphabet's Google
are the three biggest US cloud providers. In twenty twenty four,
those companies spent more than two hundred billion dollars on
capital expenditures, most of it to build new data centers.
What's the relationship like between these tech companies that need
(10:52):
all of this power and the utilities themselves. Are they
paying their fair share? Are they paying a disproportionate amount?
How's that shaking out?
Speaker 2 (10:58):
Well, utilities are really ECPs because it's a huge new
customer base for them, and this is coming after decades
of very flat growth. At the same time, there's some conflicts.
Tech is known for moving fast and breaking things. That's
their philosophy. Utilities are known for moving very slow and
making sure nothing ever breaks, you know, making sure the
lights stay on. So they're working together here. But one
thing that we're seeing is that utilities are actively figuring
(11:22):
out how to make sure that big tech is paying
its share for these data centers. They're doing things like
creating new customer classes for data centers to pay differently
than say, residential or small businesses. They're creating requirements like
data centers have to pay for certain costs, pay for
a minimum amount of power over fifteen years, even if
they use less, putting down collateral, different things like that
(11:45):
to protect their existing customers.
Speaker 4 (11:48):
Josh Leo and their team reached out to Amazon, Microsoft,
and Alphabet for comment. An Amazon spokesperson said the company
works closely with utilities and grid operators to plan for
future growth. Soft's vice president of energy told them, quote,
it's literally our responsibility to make sure that when we
come to a community, when we get connected to a grid,
that the cost of the infrastructure that's being dedicated to us,
(12:11):
that those costs of service get allocated to us. Google
said it's been working to use less electricity even as
it expands data centers, and that it supports paying its
fair share. What did you hear from utilities about this phenomenon?
What do they say about why bills are going up
and what they intend to do? About it.
Speaker 2 (12:28):
Utilities mostly point to the idea that data centers are
paying their fair share. So if a data center requires
a specific substation for its operations, the tech company will
pay for that, and no point to the reforms that
they're making in their own rate structure to charge these
large load customers differently. All of that's true, and all
that's good, but it doesn't change the fact that a
(12:50):
lot of costs are still being loaded onto regular customers.
Speaker 4 (12:53):
Dominion Energy, the utility company that serves Northern Virginia's data center,
Alley told the reporters quote, we believe data centers should
pay for the full cost of their power. That's how
we design our rates and it's the standard our regulator
uses in reviewing them. The CEO of Exelon, which runs
Baltimore's utility, said the company is pushing for long term
solutions that are fair and bring peace of mind to customers.
Speaker 2 (13:15):
Talking to one of the utilities, we asked about how
they pass these costs on to customers, and their experts said,
we sign long term contracts, so if power spikes up,
that's for the power sellers to deal with. Our customer
doesn't have to deal with that. However, the next time
we sign a contract, if there's been a lot of
variability in cost in power prices, and if the power
prices have been overall just higher, which happens because of
(13:38):
data centers, then the next contract that we sign will
be for higher prices, and then yes, that will get
passed on directly to our customers.
Speaker 4 (13:46):
Now some communities are starting to have conversations about what
it really means to have these big AI data centers
in their backyard. Are we seeing communities, are we seeing
states pushback on this in any way?
Speaker 2 (13:57):
Yeah, I'd say there's more dramatic conversation around the power
grid than anytime in my years covering it. There was
just a summit in Philadelphia where the Governor of Pennsylvania, Joshapiro,
talked about affordability. He talked about these rising bills.
Speaker 4 (14:13):
As governor of.
Speaker 6 (14:13):
This great com privilege to represent thirteen.
Speaker 3 (14:17):
Million Pennsylvania, and I.
Speaker 4 (14:18):
Can tell you they can't afford never in price increases
because of pgm's policies.
Speaker 2 (14:25):
That's something we're seeing from politicians all around. Sometimes there's
a little bit of a personality split where local government's
excited for the tax income they want companies moving in.
They want business activity, They want to fund their local
school district.
Speaker 4 (14:40):
In the city of Fayetteville, Georgia, for example, the taxes
paid by a new data center developer were expected to
bring in over one billion dollars in state and local
taxes in the next fifteen years. Taxes going to the
county Board of Education last year covered the equivalent of
some half a dozen teachers salaries.
Speaker 2 (14:57):
Then there's a split between that view and and people
who live around there who don't want big new transmission
lines going through their yards. They don't want big three
Walmart stacked on top of each other size data centers.
They don't want all of that around them. So, yeah,
there can be a lot of conflict in these communities.
Speaker 4 (15:16):
When you look at projections for the growth of AI
data centers, what do they illustrate and what is that
likely to mean for the cost of electricity in this country?
Speaker 2 (15:26):
Well, I think it's something that needs to get figured out.
Utilities are working on it. They can't have their customers
and their regulators and politicians angry at them. Big tech
similarly very attuned to what people think of them. That's
why there's a lot of conversations and a lot of
push right now to figure out how to charge data
centers for both the power that they're using and the
infrastructure that has to be built to supply their data centers.
Speaker 4 (15:48):
In the meantime, Kevin Stanley is doing his best to
deal with higher electricity bills.
Speaker 5 (15:53):
You know, they talk about upgrading and greed and this
and that, but we don't see it. Especially when you're
dealing with low income people or working class people. They
have to feel something. It has to be more tangible.
You would tell people what is a data center? They said, well,
what is it? We're just surviving.
Speaker 4 (16:18):
This is the Big Take from Bloomberg News. I'm David Gerra.
To get more from the Big Take and unlimited access
to all of Bloomberg dot com, subscribe today at Bloomberg
dot com Slash Podcast offer. Thanks for listening. We'll be
back tomorrow.
Hi, It's sucksh data centers for artificial intelligence consume huge
amounts of energy. They also happen to raise electricity prices
for people living close to those data centers. That's according
to an investigation from my colleagues's at Bloomberg News looking
at US data centers that you can hear about in
this episode of the Big Take podcast. Hope you find
(00:22):
it insightful. Zero will be back later this week with
a new episode.
Speaker 2 (00:29):
Bloomberg Audio Studios, Podcasts, Radio News. Hey, mister Stanley, how
you doing.
Speaker 3 (00:36):
I'm good, So I'm Josh who talked on the phone alright.
Speaker 4 (00:39):
Earlier this month, Bloomberg reporter Josh Saul visited a man
named Kevin Stanley. He's fifty seven and he lives in Baltimore.
Speaker 2 (00:47):
Do you'll need me to turn the lights on more?
Speaker 5 (00:48):
Because this time he.
Speaker 4 (00:51):
Josh was in Maryland to report on the effects that
data centers have on people who live near them. Kevin
lives about a two hour drive from an area known
as Data Center Alley, the world's largest concentration of data centers,
topping other hotspots like Iowa and Oregon, and Josh was
there to talk to him about one thing, in particular
(01:11):
his electricity bill, which has gone up ever since data
centers came to the region.
Speaker 2 (01:16):
Kevin's a really nice guy, really interesting guy, and he
talked about how his high power bills have had a
really rough effect on his life. He has had to
cut back on buying the groceries he likes, getting haircuts
as often as he likes. He tries to make his
diabetes medication stretch out.
Speaker 5 (01:30):
The power bills just keep going up and up, and
for me, I'm a single person in here, so I'm
like wow, like wow, the bill's going up so much.
Speaker 4 (01:40):
Kevin is blind and he lives on disability payments. He
says his energy bills are now eighty percent higher than
they were just about three years ago. And there were
days when the utility asks customers like him to use
less power to prevent blackouts or encourages them to use
less power to save money.
Speaker 5 (01:58):
They have days where they tell us, don't use any
electricity overrun air and dig but it's like ninety five degrees.
I'll done here.
Speaker 4 (02:07):
It can be difficult to pinpoint the exact root of
higher electricity bills and strain on the electrical grid, so
Josh set out to put some numbers to the growing
pressure data centers are putting on local power supply, and
he found that at a time of rapid data center
construction and investment in AI technology that needs them, demand
is driving up wholesale energy costs, and those costs are
(02:29):
being passed on to consumers.
Speaker 3 (02:31):
Josh spoke to some people that you know, started telling
him that their bills were really high.
Speaker 4 (02:36):
That's Leonardo Nicoletti, a data visualization reporter at Bloomberg who
traveled with Josh and crunched the numbers.
Speaker 3 (02:43):
When we were thinking about it, they seemed to be
living close to the hotspots of you know, AI data
centers in the United States. The main finding was that,
quite strikingly, if you are in an area that is
located close to data centers or data center activity, much
more likely to experience high price increases.
Speaker 2 (03:04):
The massive increase in the demand for AI and the
speed with which the data centers get bigger and bigger,
I think it's been a huge surprise to all of us.
Speaker 4 (03:17):
I'm David Gerrett, and this is the big take from
Bloomberg News today on the show, the staggering electricity needs
of AI data centers and how you yes, you could
end up putting the bill. AI needs a lot of
energy to work from summarized answers on Google to chat, GPT,
(03:38):
grocery lists. The rapidly growing technology requires massive amounts of
computing power, which requires a lot of actual power.
Speaker 3 (03:47):
We actually quantified this in an earlier story that Josh
and I worked together. We compared the total amount of
electricity that data centers use yearly to how much electricity
individual countries use, and we found that, for example, countries
like Italy or Australia are using actually less electricity as
a total than data centers use globally. And these numbers
(04:11):
are actually higher now because we did this, you know,
one year ago, and electricity demand is growing exponentially from
data centers.
Speaker 2 (04:19):
That numbers supposed to keep going up and up. So
Bloomberg and EF projects that it's supposed to be over
four percent by twenty thirty five of total global electricity consumption.
So if you took all the data centers at that
point and made them their own country, at that point,
they'd be the fourth biggest consumer of electricity after China,
the US, and India.
Speaker 4 (04:39):
But what Josh and Lao wanted to understand was whether
the huge demand for electricity was showing up on customers' bills.
Speaker 3 (04:46):
It took us like three months to find the data
because you know, it's actually really hard to get granular
data on power prices.
Speaker 4 (04:55):
To get that more granular picture, Layo and another Bloomberg
data visualization report or named Demetrius Podcas found a company
called grid Status that collects real time data for more
than twenty five thousand nodes around the US.
Speaker 3 (05:08):
A node is like the location on the grid, so
that's connected to transmission lines and it measures real time congestion,
real time fuel prices, and real time like supply costs,
things like that, right, and then the different factors that
are measured by that node then make up the price.
Speaker 4 (05:28):
With that data as well as data on the locations
and capacity of data centers from a company called dc Byte,
the reporters measured the distance between those nodes and areas
where there's significant data center activity. They use that to
create a data set that showed the price changes recorded
in those areas over time since twenty twenty.
Speaker 3 (05:47):
Essentially, the main finding is that seventy percent of nodes
that recorded price increases are located within fifty miles of
significant data center activity, and if.
Speaker 2 (05:58):
You look at your power bill, you're going to see
in most places a distribution charge. That's what you're paying
for all of the infrastructure, all the wires. But you're
also going to see a supply charge, and the supply
charge is what you're paying for that wholesale power. So
what lao's research says is by pushing up the price
of wholesale power, data centers are putting that upward pressure
on your power bill.
Speaker 4 (06:17):
So effectively, if I open up that bill, I'm not
going to see AI data centers as a line item,
but it's having that effect on what you're describing exactly.
Josh says there are two key mechanisms that drive up
electricity costs around data center hotspots.
Speaker 2 (06:33):
The first, to really summarize supply and demand, they use
a lot of electricity, which can make electricity more expensive
for everybody, so that's one way that can push up
customer bills. The other ways that they require a lot
of new infrastructure, mostly transmission lines, but also new power plants,
and the costs of building that are spread out among
all customers, including regular people like you.
Speaker 4 (06:53):
Monitoring Analytics is an outside watchdog that keeps an eye
on the largest US electric grid, PJM, is that data
center development raised costs for customers on pjm's grid, which
spans from Illinois to Washington, d C. By more than
nine point three billion dollars over a twelve month period
starting in June. Today, thirty three percent of all the
electricity used in Oregon is attributed to data centers. In Virginia,
(07:17):
it's thirty seven percent. That's according to data from dc
BYTE and the US Energy Information Agency. Communities in surrounding
areas are starting to do the math, and they're also
connecting higher bills to data centers.
Speaker 6 (07:30):
You don't have to see those data centers to see
the higher electric bills.
Speaker 4 (07:34):
That's David Lapp, a consumer advocate from the Maryland Office
of People's Council.
Speaker 6 (07:39):
We don't have in Maryland too many data centers, so
the costs are being driven up by data centers that
are out of state largely, and many of them in
northern Virginia.
Speaker 4 (07:48):
In February, the Baltimore City Council led a hearing on
the issue of rising Baltimore gas and electric bills.
Speaker 2 (07:56):
The current state of these BGE bills and the skyrocketing
rates is simply not sustainable for our constituents.
Speaker 4 (08:05):
And one of the people who spoke at the hearing
was Kevin Stanley, the man Josh and Laoe interviewed in Baltimore.
Speaker 5 (08:11):
Are you yes, good evening everyone. My name is Kevin Stanley.
Speaker 4 (08:16):
Kevin didn't know what was causing his bills to spike.
He just knew it was a problem.
Speaker 5 (08:20):
And there's no reason that Baltimore is should have the
excess of gas electric race.
Speaker 2 (08:26):
That they had.
Speaker 3 (08:27):
When Josh asked Kevin Stanley what he thought about data centers,
his reply.
Speaker 5 (08:32):
Was so they could say, oh, this is going to
help with AI. But how's that going to help me?
How's that going to help me pay up bill?
Speaker 4 (08:41):
So how do utilities decide who fronts the cost? And
how are those communities responding? That's after the break A
team of Bloomberg reporters dug into the rising costs of
electricity to see if the rapid construction of data centers
in some areas could be to blame, and they found
(09:04):
a link. Places with heightened data center activity were more
likely to see higher wholesale energy costs, meaning the presence
of data centers was raising power prices and eventually pushing
up customer bills. I asked Bloomberg reporter Josh Saul about
why that's happening when people usually expect to pay for
their own utility costs. I think about how I study
(09:26):
my electricity build with the extent that I do, and
maybe in the summer, I'm using my air conditioner more,
maybe in the winter I'm using my heat more. But
these are all kind of selfish things. I'm determining when
the bill goes up or down, why should I be
paying for the expenses of associated with these data centers.
Speaker 2 (09:43):
Well, I think there's two arguments that people make. I mean,
the first is that AI, whether you like it or not,
is becoming an increasingly large part of our world. So
from national security to the argument that we don't want
other countries to be way better at AI than we are,
to the fact that now our Google searches and even
our texts to our friends are guided by or instructed
(10:04):
by AI. So there's one argument there that we're all
using AI. And there's also an old utility law. The
way we do this is that the costs are shared
among everyone. So if you build a new house or
hook up to the grid. As a new business, you
don't pay for all of those costs to hook you up.
It's socialized among everyone on the grid. So utilities are
(10:24):
following that general principle. Now with these large new customers
data centers.
Speaker 4 (10:30):
It's tech companies that are deciding when and where to
build a new data center. Amazon, Microsoft, and Alphabet's Google
are the three biggest US cloud providers. In twenty twenty four,
those companies spent more than two hundred billion dollars on
capital expenditures, most of it to build new data centers.
What's the relationship like between these tech companies that need
(10:52):
all of this power and the utilities themselves. Are they
paying their fair share? Are they paying a disproportionate amount?
How's that shaking out?
Speaker 2 (10:58):
Well, utilities are really ECPs because it's a huge new
customer base for them, and this is coming after decades
of very flat growth. At the same time, there's some conflicts.
Tech is known for moving fast and breaking things. That's
their philosophy. Utilities are known for moving very slow and
making sure nothing ever breaks, you know, making sure the
lights stay on. So they're working together here. But one
thing that we're seeing is that utilities are actively figuring
(11:22):
out how to make sure that big tech is paying
its share for these data centers. They're doing things like
creating new customer classes for data centers to pay differently
than say, residential or small businesses. They're creating requirements like
data centers have to pay for certain costs, pay for
a minimum amount of power over fifteen years, even if
they use less, putting down collateral, different things like that
(11:45):
to protect their existing customers.
Speaker 4 (11:48):
Josh Leo and their team reached out to Amazon, Microsoft,
and Alphabet for comment. An Amazon spokesperson said the company
works closely with utilities and grid operators to plan for
future growth. Soft's vice president of energy told them, quote,
it's literally our responsibility to make sure that when we
come to a community, when we get connected to a grid,
that the cost of the infrastructure that's being dedicated to us,
(12:11):
that those costs of service get allocated to us. Google
said it's been working to use less electricity even as
it expands data centers, and that it supports paying its
fair share. What did you hear from utilities about this phenomenon?
What do they say about why bills are going up
and what they intend to do? About it.
Speaker 2 (12:28):
Utilities mostly point to the idea that data centers are
paying their fair share. So if a data center requires
a specific substation for its operations, the tech company will
pay for that, and no point to the reforms that
they're making in their own rate structure to charge these
large load customers differently. All of that's true, and all
that's good, but it doesn't change the fact that a
(12:50):
lot of costs are still being loaded onto regular customers.
Speaker 4 (12:53):
Dominion Energy, the utility company that serves Northern Virginia's data center,
Alley told the reporters quote, we believe data centers should
pay for the full cost of their power. That's how
we design our rates and it's the standard our regulator
uses in reviewing them. The CEO of Exelon, which runs
Baltimore's utility, said the company is pushing for long term
solutions that are fair and bring peace of mind to customers.
Speaker 2 (13:15):
Talking to one of the utilities, we asked about how
they pass these costs on to customers, and their experts said,
we sign long term contracts, so if power spikes up,
that's for the power sellers to deal with. Our customer
doesn't have to deal with that. However, the next time
we sign a contract, if there's been a lot of
variability in cost in power prices, and if the power
prices have been overall just higher, which happens because of
(13:38):
data centers, then the next contract that we sign will
be for higher prices, and then yes, that will get
passed on directly to our customers.
Speaker 4 (13:46):
Now some communities are starting to have conversations about what
it really means to have these big AI data centers
in their backyard. Are we seeing communities, are we seeing
states pushback on this in any way?
Speaker 2 (13:57):
Yeah, I'd say there's more dramatic conversation around the power
grid than anytime in my years covering it. There was
just a summit in Philadelphia where the Governor of Pennsylvania, Joshapiro,
talked about affordability. He talked about these rising bills.
Speaker 4 (14:13):
As governor of.
Speaker 6 (14:13):
This great com privilege to represent thirteen.
Speaker 3 (14:17):
Million Pennsylvania, and I.
Speaker 4 (14:18):
Can tell you they can't afford never in price increases
because of pgm's policies.
Speaker 2 (14:25):
That's something we're seeing from politicians all around. Sometimes there's
a little bit of a personality split where local government's
excited for the tax income they want companies moving in.
They want business activity, They want to fund their local
school district.
Speaker 4 (14:40):
In the city of Fayetteville, Georgia, for example, the taxes
paid by a new data center developer were expected to
bring in over one billion dollars in state and local
taxes in the next fifteen years. Taxes going to the
county Board of Education last year covered the equivalent of
some half a dozen teachers salaries.
Speaker 2 (14:57):
Then there's a split between that view and and people
who live around there who don't want big new transmission
lines going through their yards. They don't want big three
Walmart stacked on top of each other size data centers.
They don't want all of that around them. So, yeah,
there can be a lot of conflict in these communities.
Speaker 4 (15:16):
When you look at projections for the growth of AI
data centers, what do they illustrate and what is that
likely to mean for the cost of electricity in this country?
Speaker 2 (15:26):
Well, I think it's something that needs to get figured out.
Utilities are working on it. They can't have their customers
and their regulators and politicians angry at them. Big tech
similarly very attuned to what people think of them. That's
why there's a lot of conversations and a lot of
push right now to figure out how to charge data
centers for both the power that they're using and the
infrastructure that has to be built to supply their data centers.
Speaker 4 (15:48):
In the meantime, Kevin Stanley is doing his best to
deal with higher electricity bills.
Speaker 5 (15:53):
You know, they talk about upgrading and greed and this
and that, but we don't see it. Especially when you're
dealing with low income people or working class people. They
have to feel something. It has to be more tangible.
You would tell people what is a data center? They said, well,
what is it? We're just surviving.
Speaker 4 (16:18):
This is the Big Take from Bloomberg News. I'm David Gerra.
To get more from the Big Take and unlimited access
to all of Bloomberg dot com, subscribe today at Bloomberg
dot com Slash Podcast offer. Thanks for listening. We'll be
back tomorrow.
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