Data center boom may transfer electricity costs to ratepayers

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The rapid growth of data centers in the United States is projected to significantly increase electricity demand, potentially accounting for 12% of total demand by 2030. This surge is prompting utilities to aggressively pursue data center projects, which could lead to substantial financial implications for other ratepayers. A report from Harvard University's Environmental & Energy Law program highlights concerns that utilities may be offering favorable, often secret contracts to attract data centers, resulting in the costs of new infrastructure being shifted to ratepayers who do not benefit from the additional capacity.

The report indicates that public utilities commissions (PUCs) frequently approve these contracts with minimal scrutiny, allowing utilities to bypass established rate structures. This could lead to increased costs for ratepayers if data centers do not utilize their projected electricity needs or if new technologies reduce power requirements. The authors recommend that PUCs implement stricter guidelines for reviewing special contracts and suggest the creation of “energy parks” where data center builders would be responsible for their energy generation, promoting low-carbon solutions in line with corporate sustainability goals.