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Data centers have hiked electricity prices on the public by $23B

fortune.com

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Re: Data centers have hiked electricity prices on the public by $23B

#51

Post by phil21 »

butvacuum wrote: post #41
TurdF3rguson wrote: post #37

Earlier quoted context omitted.

Right, you can't point to a year where price increases didn't happen, so "a primary reason" becomes meaningless. It was going to happen for other reasons if it didn't happen for this one.

by my research, everything has scaled almost linearly with population. But- there was a huge, undeniable, dip in cost of a kw/h of power when lighting started focusing on CFLs and LEDs. Grid expansion stalled, and now people are upset since it started growing again

Doesn’t the rollout of more efficient lighting also coincide with the shale gas boom? This also happened at right around the time coal plants were starting to be retired for good as well, which short-circuited some expected generation cost increases.

You also had the de-industrialization of the US happening at the same time, which also took pressure off the transmission grid.

We basically had a few things offset population growth to allow us to use our grandparents electric grid investments for far beyond their expected lifetime. We’ve finally just caught up after a free ride over the past 4-5 decades.

I overall agree with you strongly, just surprised that more efficient lighting would have that much impact on grid demand.

Re: Data centers have hiked electricity prices on the public by $23B

#52

Post by claw-el »

m-hodges wrote: post #4

> But what if the power company needs to upgrade the substation to handle the increased needs of the data center? Or secure additional sources of electricity? In these cases, the investments are part of the electricity grid that everyone uses. These costs will likely be shared among all customers. Okay but this is a policy choice. It doesn’t have to be that way.

Yes, an alternative policy could be, the same unit price for electricity, and the additional cost is covered by increased usage (at the same unit price). The entity making the decision for the increased investment (the utilities company) will take the risk and rewards that comes with the investment.

But, if it turns out to be a reward, people will revolt that for-profit company is making excess profit from something as basic as utilities.

Re: Data centers have hiked electricity prices on the public by $23B

#53

Post by Retric »

ip26 wrote: post #23
SoftTalker wrote: post #14

Earlier quoted context omitted.

Where I live, if a developer wants to build a subdivision, they pay for the water and sewer lines. They pay to connect those lines to the city infrastructure. If the city infrastructure needs to be upgraded to handle the new volumes, they pay for at least a proportionate share of that too. The ongoing maintenance becomes part of the city's budget eventually, but not the costs of the build out. All those costs go into…

The “affordable” housing thing seems like such a misdirection. I can’t help but daydream that some moneyed interest somewhere fans those flames, as it looks like a dead end that can absorb endless fervor. You know what you do if you want an affordable car? You buy used. I think most people understand Ford is never going to build another a car that costs $10k brand new, and the last new car near that price barely sold…

Houses don’t shrink as they age.

When everything is built huge you don’t end up with homes that are cheap to heat, cool, or maintain. That’s why building affordable houses is actually a real issue.

What’s really dumb is the average number of people living in a house has tanked over time but the median new home just keeps getting larger. In an efficient market you’d expect new homes to match what buyers want, but regulatory capture has severely distorted the market.

Re: Data centers have hiked electricity prices on the public by $23B

#54

Post by kmod »

This $23B number that gets thrown around is not the increase to the public. The wording in the referenced report is

> Based on actual auction clearing prices and quantities and uplift MW, inclusion of existing and forecast data center load growth resulted in a combined total increase in capacity market revenue for the 2025/2026 BRA, the 2026/2027 BRA, and the 2027/2028 BRA of $23,100,955,341.

This is the increase in revenue to PJM from adding datacenter customers, and includes both the amount that datacenters paid as well as the amount that other customers paid due to higher prices from datacenters. So Fortune calling it an increase to "the public" means that they didn't read the report they are using as their source and are probably just repeating what they thought someone else meant.

Bloomberg in the past worded it as "data centers will add at least $23 billion to customer bills" in April and "added a minimum of $23 billion to customer bills" in February. Which while technically correct (datacenters are customers) seems meant to be misleading. And now that's the number that's getting thrown around as the increase to "the public".

The part I don't get is that the journalists could just give the actual number for the quantity that they are referring to (the amount that non-datacenters paid due to higher rates due to datacenter loads): when I calculated it a few months ago I think it was something like $16 billion rather than $23 billion. I feel like the story would have the same impact if the headline number was $16B as $23B, but $16B has the benefit of not being a misrepresentation of the situation.

---

Also I would definitely recommend checking out the PJM BRA report. It's a bit dense but not too hard to follow, and my personal takeaway was that the PJM market is just very dysfunctional and they are blaming the datacenters instead. I thought SemiAnalysis had a good analysis of it: https://newsletter.semianalysis.com/p/are-ai-datacenters-inc...

Re: Data centers have hiked electricity prices on the public by $23B

#56

Post by NewsaHackO »

anubistheta wrote: post #33

It's important to ground the increase in raw numbers. The total revenue for electricity generation was $514b in 2024. So this was a 4-5% increase in costs. And if it is being invested in better generation and our aging infrastructure, that seems fine.

The fact they gave a raw number instead of a percent of a quantity that is a change hinted that this was the case. $23B is more impressive than 4%.

Re: Data centers have hiked electricity prices on the public by $23B

#57

Post by bell-cot »

derektank wrote: post #49
bakies wrote: post #42

Earlier quoted context omitted.

None? There's like 12 jobs per datacenter and the revenue goes to the Valley, mostly. The utilities get some profit but I doubt that money stays very local either.

Data centers pay taxes don’t they? That money presumably goes into funding government services which would necessarily raise the local GDP

Only if the data center's task force of influencers, lobbyists, and arm-twisters are incompetent.

https://en.wikipedia.org/wiki/Tax_abatement

(Yes, in general, they'll pay some tax. Some. But they also add a wide variety of direct and indirect expenses, both fiscal and social.)

Re: Data centers have hiked electricity prices on the public by $23B

#58

Post by paulryanrogers »

Retric wrote: post #53
ip26 wrote: post #23

Earlier quoted context omitted.

The “affordable” housing thing seems like such a misdirection. I can’t help but daydream that some moneyed interest somewhere fans those flames, as it looks like a dead end that can absorb endless fervor. You know what you do if you want an affordable car? You buy used. I think most people understand Ford is never going to build another a car that costs $10k brand new, and the last new car near that price barely sold…

Houses don’t shrink as they age. When everything is built huge you don’t end up with homes that are cheap to heat, cool, or maintain. That’s why building affordable houses is actually a real issue. What’s really dumb is the average number of people living in a house has tanked over time but the median new home just keeps getting larger. In an efficient market you’d expect new homes to match what buyers want, but regu…

What makes me crazy is these big houses aren't even that nice. They don't have significantly more rooms. It's all just stretched out to maximize sq ft for minimal costs. Sometimes with so many cut corners they're unsafe.

So if you have a big family or multigenerational needs then often you have to do significant remodeling or sell anyway.

Re: Data centers have hiked electricity prices on the public by $23B

#59

Post by jamescrowley »

gruez wrote: post #24

Isn't almost all of the datacenter build out for inference, rather than training? If so, what's the issue? If the electricity demand is coming from actual use, then why are people getting mad at datacenters or AI companies, rather than the actual people driving the demand? It's like getting mad at Amazon for how much they increased fuel prices, which they surely did, given all the fuel that their trucks/planes burn.…

Or getting mad at oil & gas companies? They’re only supplying the fossil drugs we demand. And using their billions in profits to lobby at every level of government and society to ensure they can continue despite the scientific evidence of harm that they’ve known since the 70s? Not at all like that.

https://www.investigate-europe.eu/posts/big-tech-data-centre...

https://www.politico.eu/article/europe-choose-ai-climate-goa...

Re: Data centers have hiked electricity prices on the public by $23B

#60

Post by MaxHoppersGhost »

bakies wrote: post #42
MaxHoppersGhost wrote: post #39

What is the increase in jobs/GDP for those communities that have paid more in electricity? A lot of these data centers are built in places with declining population and zero economic prospects for locals within their communities so they're a huge boon.

None? There's like 12 jobs per datacenter and the revenue goes to the Valley, mostly. The utilities get some profit but I doubt that money stays very local either.

Places I know that are getting them are generally seeing big time pay (relatively that is) for construction work and then dozens to a hundred of ongoing jobs once the work is done. That doesn't sound like much but it's huge for many of these communities.
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