Three Democratic senators said on Tuesday that they are investigating whether and how the operations of technology companies are driving up residential electricity bills.
In letters sent on Monday to Google, Microsoft, Amazon, Meta and three other companies, the lawmakers said the energy needs of data centers used for artificial intelligence were forcing utilities to spend billions of dollars to upgrade the power grid. Energy companies typically recoup the money they invest in equipment through the rates they charge all users of electricity.
The senators — Elizabeth Warren of Massachusetts, Chris Van Hollen of Maryland and Richard Blumenthal of Connecticut — said they were concerned that customers other than the tech companies would be stuck footing the bill, especially if the A.I. boom ended.
“We write in light of alarming reports that tech companies are passing on the costs of building and operating their data centers to ordinary Americans as A.I. data centers’ energy usage has caused residential electricity bills to skyrocket in nearby communities,” the senators said.
Most of the companies said they did not have an immediate comment. CoreWeave did not respond to a request for comment. One company, Digital Realty, said in a statement that it “looks forward to working with all elected officials to continue to invest in the digital infrastructure required to support America’s leadership in technology.”
The biggest tech companies have consistently said they want to pay their fair share of energy costs and in some states have brokered deals with utilities to try to do so. But there is little consensus about exactly how much they should pay.
Contracts between data centers and utility companies are almost always confidential, leaving the public in the dark on why electric bills have risen. The lawmakers, who are seeking responses by Jan. 12, cited an article in The New York Times in August that detailed the tech companies’ growing role in the electricity business and their impact on energy costs.
Many forces are causing electricity rates to increase, including the replacement of old plants and hardening of power lines against wild fires. But data centers are a particularly hot-button issue given how much their demand is expected to grow.
Concern about rising electricity rates has emerged as a leading economic and political issue. Rising electricity prices played a big role in recent elections, including statewide races in Georgia, New Jersey and Virginia.
A recent study from Lawrence Berkeley National Laboratory found that data centers have probably helped reduce average retail electricity prices in recent years by spreading the fixed upgrade costs over more customers. But the authors said it was hard to know whether this trend would continue as demand for energy continued to rise sharply. They pointed to a large increase this year in power prices in the Mid-Atlantic region that has been linked to data centers.
After roughly 20 years of flat or minimal growth in U.S. electricity demand, power needs are rising and are expected to surge in the next several decades. In addition to the four tech giants, the senators sent letters to CoreWeave, Digital Realty and Equinix — companies that specialize in providing data centers and computing power for other businesses.
The large, boxy data center buildings filled with computer servers consumed more than 4 percent of the nation’s electricity in 2023. Government analysts estimate that will increase to as much as 12 percent in just three years. That’s because computers that train A.I. systems consume much more electricity than those used for popular internet services like Netflix or TikTok.
To meet that demand, energy companies have rushed to build more power plants and power lines. Although tech companies are shouldering a lot of those costs, they are not paying for all of it. Some of the expenses are ultimately borne by other businesses and individuals through higher electricity rates.
“Utility companies have spent billions of dollars updating the electrical grid to accommodate the unprecedented energy demands of A.I. data centers and appear to recoup the costs by raising residential utility bills,” the senators said in their letters.
Tech companies are pushing to build many more data centers to meet current and anticipated demand for cloud computing and artificial intelligence. Microsoft, Meta, Google and Amazon spent more than $360 billion on capital expenditures in just the first nine months of the year.
The senators noted that a growing push for new nuclear reactors, which are much more expensive to build than wind, solar and natural gas projects, could raise electricity costs even more.
The average cost for electricity for the typical household that uses 1,000 kilowatt-hours of electricity rose 7 percent in September from a year earlier, to about $181, according to the Energy Information Administration, a federal agency.
President Trump signed an executive order last week to encourage A.I. development and limit the ability of states to slow its progress. The order, which authorizes the attorney general to sue states and overturn laws that do not support the “United States’ global A.I. dominance,” could make it more difficult to limit spending on the electric grid.
Ivan Penn is a reporter based in Los Angeles and covers the energy industry. His work has included reporting on clean energy, failures in the electric grid and the economics of utility services.
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