Data centres owned and operated by Amazon Web Services in Ashburn, Virginia. Electricity rates for individuals and small businesses could rise sharply as Amazon, Google, Microsoft and other technology companies build data centres and expand into the energy business. — Nathan Howard/The New York Times
JUST a few years ago, technology companies were minor players in energy. They invested in solar and wind farms to curb their carbon footprints and reassure customers worried about climate change.
Now they are reshaping the US power industry. No longer just consumers, tech firms have become some of the sector’s most dominant players, setting up subsidiaries to generate electricity and even sell it on to utilities.
Their operations now dwarf many traditional power companies.
But their all-out push into artificial intelligence is straining the system. Running the huge data centres that pepper Virginia, Ohio and other states requires staggering amounts of energy.
In 2023, these sprawling server farms already consumed more than 4% of the nation’s electricity.
Government analysts estimate demand could triple to 12% within three years.
The implications are stark. The AI surge threatens to drive up household and small-business bills, which have already risen more than 30% since 2020.
Much of that increase stemmed from deferred maintenance and grid fortification against extreme weather. Now, data centres risk turbocharging those costs.
A June study by Carnegie Mellon University and North Carolina State University projected electricity bills climbing an average of 8% nationwide by 2030, and as much as 25% in Virginia, primarily due to data centres.
In some places, the pressure is already visible. From June, households in Ohio saw electricity bills rise by at least US$15 a month because of data centre demand, according to a major utility and an independent monitor.
Tech companies insist they are willing to pay for the power they use and for much of the infrastructure needed to supply it. But how to share the costs is fraught with disputes.
“The business of keeping America’s lights on is mostly about two things: supplying reliable electricity and figuring out what to charge,” said Mark Cooper, an analyst at the Institute for Energy and the Environment at Vermont Law and Graduate School. “Unless people lean on the public utilities commissions, the ratepayers will take it on the chin.”
Showdown in Ohio
The most striking battle has unfolded in Ohio.
On a snowy December day in Columbus, lawyers for Amazon, Google, Microsoft and others clashed with representatives of American Electric Power (AEP), one of the nation’s biggest utilities.
The tech firms had proposed dozens of new data centres – so many that AEP projected demand would soon require six times the electricity currently generated in central Ohio.
Months of negotiations with the state regulator and consumer groups had inched towards a compromise. But in October, before talks wrapped up, the tech companies blindsided AEP with their own proposal.
Industry experts said they had never seen such a move. The tech plan meant paying less upfront than AEP wanted.
Days later, AEP, the consumer representative and regulator staff countered with a tougher plan: a new class of customer specifically for data centres, requiring them to pay more.
This new category would join the four existing ones in Ohio – households, businesses, factories and public rail – all of which pay different rates.
AEP, which has 5.6 million customers across 11 states, warned that without its proposal, residents and small businesses would end up covering much of the cost of tech companies’ voracious energy needs.
AEP argued data centres and cryptocurrency miners should pay for at least 85% of the electricity they request, whether they used it or not. The tech firms countered with 75%, depending on contract length, leaving more of the burden on others.
The companies also argued that factories and other large customers should be treated the same way as data centres, and that the threshold for being considered a “large” user should be higher.
Kevin Miller, until recently a vice-president at Amazon, said AEP’s plan risked tech firms overpaying because data centres expand in phases. Companies could end up footing bills for power they never used – or for electricity the utility failed to deliver, he added.
After months of wrangling, the Public Utilities Commission of Ohio ruled 5-0 in July against the tech firms. The companies have since petitioned for a rehearing, branding the decision “unlawful and unreasonable”.
Overpromising, underdelivering
At the heart of the fight is whether tech firms are overestimating how much power they will need. If AI demand fizzles or chips become far more efficient, ratepayers could be stuck covering upgrades that sit idle.
That is not a hypothetical. Tech companies have a track record of announcing data centres that never materialise or are delayed for years.
A notorious example unfolded in Virginia. In 2010, a developer called Unicorn Interests promised Dominion Energy it would need electricity for a data centre by 2013. Regulators approved Dominion’s US$42mil plan for a substation and transmission line.
By mid-2013, Dominion had already procured equipment and broken ground. But the project lagged. The data centre only signed a customer in 2017, four years late.
During that time, local ratepayers covered millions of dollars in costs for equipment that sat idle. Because the developer was not drawing power, it paid Dominion little or nothing.
For utilities, the lesson is clear: forcing tech firms to shoulder more upfront costs is insurance against such risks. For consumers, the stakes are even higher – every overpromise means higher monthly bills. — ©2025 The New York Times Company
This article originally appeared in The New York Times
