Despite a financial situation more reminiscent of a Ponzi scheme than a technological revolution, the data center boom is continuing at a rapid pace, bringing novel kinds of biological contamination, ear-splitting noise, and unprecedented levels of pollution to communities across the US.
Those environmental burdens also come with a financial one: skyrocketing demand for electricity, which is increasing the cost of utilities for renters and homeowners alike.
According to a report by Monitoring Analytics, an independent monitor for the largest transmission company in the US, PJM, data center demand is expected to drive over $23 billion in customer price increases by 2028. That eye-watering figure, first spotted by Fortune, is a direct result of the country’s old and confusing electrical infrastructure, which ultimately leaves regular people, not the tech industry, holding the bag.
Whether they’re data centers, factories, or other large facilities, Fortune points out that local regulators and transmission companies like PJM have a hard time figuring out who’s responsible for rising energy demand. While a small power line from a data center campus to a nearby substation is easily billed to the data center, figuring out who to invoice gets harder further on down the line, particularly with shared infrastructure like the substation itself, or the long-distance transmission lines connecting to it.
Though utility companies can and do charge data centers for the electricity they use, Fortune observes that the facilities undergirding the AI boom can “fine tune” their electricity use minute-by-minute, gaining an edge that the average consumer could only dream of.
Because many utility companies charge based on a system of “peak demand” — a measure of a customer’s energy usage at the exact moment the collective grid hits peak demand — data centers have gotten into the habit of scaling down right when the grid measures highest demand. That’s not because they’re actually trying to use less power, but because that narrow window is what determines how high their bill will be. In reality, their overall usage remains the same.
This is more or less the scenario that played out in a Bitcoin mining operation in Texas, where the company Riot Platforms agreed to cut its power use on hot summer days, only to ramp back up massively at night. In exchange, the company negotiated for a lower flat electricity rate overall, and even snagged some state subsidies meant to encourage responsible energy use.
Load-shifting like this can genuinely help the grid, but it also means companies with the ability to game the system get rewarded with subsides that an average household will never get. And because companies are merely changing when they suck their juice — not how — subsidized load-shifting ends up being a poor strategy for reducing electrical use overall.
And while data centers are just the most contemporary example of this practice, the shrewd manipulation of US energy markets by for-profit corporations dates back decades. That may not be comforting news for citizens scrambling to hold data center firms accountable in the here-and-now, but it should at least give them an idea of where to start looking for inspiration.
More on data centers: New York Becomes First State to Ban AI Data Centers
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