Senators Count the Shady Ways Data Centers Pass Energy Costs On To Americans

U.S. senators are probing whether Big Tech data centers are driving up local electricity bills by socializing grid upgrade costs onto residents. Some of the tactics they're using include NDAs, shell companies, and lobbying. Ars Technica reports: In letters (PDF) to seven AI firms, Senators Elizabeth Warren (D-Mass.), Chris Van Hollen (D-Md.), and Richard Blumenthal (D-Conn.) cited a study estimating that 'electricity prices have increased by as much as 267 percent in the past five years' in 'areas located near significant data center activity.' Prices increase, senators noted, when utility companies build out extra infrastructure to meet data centers' energy demands -- which can amount to one customer suddenly consuming as much power as an entire city. They also increase when demand for local power outweighs supply. In some cases, residents are blindsided by higher bills, not even realizing a data center project was approved, because tech companies seem intent on dodging backlash and frequently do not allow terms of deals to be publicly disclosed.

AI firms 'ask public officials to sign non-disclosure agreements (NDAs) preventing them from sharing information with their constituents, operate through what appear to be shell companies to mask the real owner of the data center, and require that landowners sign NDAs as part of the land sale while telling them only that a 'Fortune 100 company' is planning an 'industrial development' seemingly in an attempt to hide the very existence of the data center,' senators wrote. States like Virginia with the highest concentration of data centers could see average electricity prices increase by another 25 percent by 2030, senators noted. But price increases aren't limited to the states allegedly striking shady deals with tech companies and greenlighting data center projects, they said. 'Interconnected and interstate power grids can lead to a data center built in one state raising costs for residents of a neighboring state,' senators reported.

Under fire for supposedly only pretending to care about keeping neighbors' costs low were Amazon, Google, Meta, Microsoft, Equinix, Digital Realty, and CoreWeave. Senators accused firms of paying 'lip service,' claiming that they would do everything in their power to avoid increasing residential electricity costs, while actively lobbying to pass billions in costs on to their neighbors. Particularly problematic, senators emphasized, were reports that tech firms were getting discounts on energy costs as utility companies competed for their business, while prices went up for their neighbors.

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