- US senators have criticized big tech companies for forcing families to pay higher energy bills.
- Data centers consume hundreds of megawatts, placing significant strain on local electricity grids.
- Private contracts can hide which companies are actually paying for energy expansion.
Three Democratic US senators, Elizabeth Warren, Chris Van Hollen and Richard Blumenthal, are demanding that big tech companies explain why electricity prices are rising in data-heavy areas.
These messages are aimed at companies that have invested heavily in cloud hosting and large-scale artificial intelligence infrastructure.
Lawmakers say the government’s guarantee to cover energy costs pales in comparison to the energy costs consumers are facing due to rising utility prices.
Technology companies have come under fire for not paying energy bills.
“Tech companies have lied to cover data center energy costs, but their actions show otherwise,” he wrote.
“When utilities expand their network infrastructure, they incorporate the cost of the expansion into their utility bills and pass the additional cost on to customers,” he said.
On the same day as the letter was published, Amazon published the results of a study conducted by the Department of Energy and Environmental Economics.
The report argues that data center hosting capacity generates enough revenue for energy companies to offset the costs of providing the service.
Research has shown that in some scenarios, windfall gains may also benefit other taxpayers.
However, this analysis relies heavily on expected and simulated outcomes rather than verified historical claims data.
Some would argue that modern data centers consume large amounts of energy.
Facilities supporting AI workloads often require hundreds of megawatts, with some requests reaching gigawatts.
Many local power grids are not designed to handle this level of sustained demand, forcing utilities to invest billions of dollars in next-generation transmission lines and local upgrades to keep servers running.
The senator said utilities typically offset the costs of infrastructure expansion by raising rates for their customer base.
This means that home users and small businesses bear the costs associated with industrial-scale computer projects.
According to a study cited in the paper, electricity prices could rise 8% nationwide by 2030, even more in states with concentrated data centers like Virginia.
Private contracts between utility companies and technology companies are an ongoing concern.
A study by lawmakers found that many companies have successfully negotiated favorable tariffs while avoiding direct responsibility for grid upgrades.
Confidentiality provisions prevent regulators and the general public from knowing clearly how costs are allocated.
The lack of transparency makes it difficult to match company claims with documented increases in wholesale and retail electricity prices.
“Agreements between data centers and power companies that set electricity rates and other terms are generally confidential,” the senators wrote.
“Tech companies looking for sites to build new data centers are using coercive tactics to achieve lower costs, forcing energy companies to offer favorable prices by signaling they can build elsewhere instead.”
Amazon argues that its facilities help, not hurt, taxpayers, although anecdotal evidence and regulations suggest otherwise.
Some areas with high data center activity have seen wholesale electricity prices rise rapidly in recent years.
Estimates of potential benefits are difficult to reconcile with current billing trends, and unanswered questions remain about who will ultimately pay for the rapid expansion of AI-based infrastructure.
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