Concerned over continually rising energy costs linked to AI datacenter construction projects, three Democratic Senators are asking leading bit barn operators to explain why their promises of not passing grid expansion costs onto consumers are falling short.
Senators Elizabeth Warren (D-MA), Chris Van Hollen (D-MD), and Richard Blumenthal (D-CT) sent letters to Google, Microsoft, Amazon, Meta, CoreWeave, Digital Realty, and Equinix on Monday, demanding answers on their contributions to rising utility rates, which the lawmakers blame firmly on the explosion of datacenter construction projects.
Because the massive scale of AI datacenters requires more power than most grids can supply, the Senators explain in their letters, utility companies have to build out their grids to the tune of billions of dollars.
“Tech companies have paid lip service in support of covering their data centers’ energy costs, but their actions have shown the opposite,” the trio wrote.
They cite a number of studies and reports that conclude US electricity prices are most definitely rising, with much of the increase driven, unsurprisingly, by datacenters.
The electrical grid in many regions was not designed to accommodate the hundreds of megawatts, and in some cases approaching a gigawatt, that large modern datacenters are projected to draw, meaning utilities in areas targeted for new facilities often have to invest in new generation, transmission, and local grid upgrades.
“When utilities expand their grid infrastructure, they incorporate the cost of expansion into their utility rates, passing the extra costs onto their customers,” the Senators wrote.
According to the trio of lawmakers, and the research they cite in the letters, the promises from datacenter operators to offset rate increases caused by power infrastructure buildout continually fall flat.
One piece of research cited in the letters from Harvard Law School’s Electricity Law Initiative found that, across 50 regulatory proceedings they reviewed about datacenter utility rates, technology companies continually find a way to avoid having to pay their share of infrastructure buildouts. Confidential contracts between datacenter operators and utility companies make it even harder to know how rate increases are being passed on to residential customers.
“Contracts between data centers and utility companies that set electricity prices and other terms are typically confidential,” the Senators wrote. “Tech companies searching for a site for a new data center reportedly employ hard-nosed tactics to achieve lower rates … and then [pressure] utilities to give them favorable rates by suggesting they may build elsewhere instead.”
Coincidentally or not, Amazon chose Tuesday to release the findings from a third-party report it commissioned, claiming that its datacenters not only don’t increase electricity costs, but can even benefit ratepayers.
The study, performed by Energy and Environmental Economics (E3), largely couches its findings in terms of potentialities and projections rather than actual data, though.
“E3 compared each facility’s projected utility revenue to the estimated utility cost to serve the facility,” E3 noted. “E3 found that the data centers generate sufficient revenue to cover their costs and, in many instances, generated surplus revenue, providing a potential net benefit to other ratepayers.”
With plenty of anecdotal evidence and documented rate increases contradicting Amazon’s claims, however, it’s hard to believe the company’s proclamation that its datacenter projects are helping, instead of harming, consumers who are facing increasing energy bills that most are directly attributing to datacenter projects.
Per the Senators’ letters, driven by the combined energy demands of AI datacenters and cryptocurrency miners, US electricity costs are projected to rise 8 percent nationwide by 2030, and up to 25 percent in states like Virginia with a high concentration of bit barns. Some areas of “significant datacenter activity” have seen wholesale electricity prices rise by as much as 267 percent in the past five years.
The datacenter energy consumption boom isn’t really up for debate at this point, though Amazon’s statements make it seem as if they are. We reached out to the companies that received letters from the trio, but didn’t immediately hear back from any. ®
