US utilities plot big rise in electricity rates as data centre demand booms

https://www.ft.com/content/c5f20c78-7931-492f-9153-675f3046e245

71•1vuio0pswjnm7•8h ago

Comments

tw04•7h ago

It would seem to me that the datacenters in question should be bearing the entire cost of the increase. Anything else is just subsidizing someone's business. The utilities are there to serve the people, and Facebook trying to mine everything I do online, violating my privacy, isn't something I have any interest in subsidizing.

linotype•7h ago

Subsidizing big business and the rich is the American way. Just look at how much money we spend on the old vs the young.

aiaisiskbs•7h ago

Yep, same deal with birth rates and immigration. Instead of taking money from the rich to enable more native births we import cheap/exploitable labor. The wealthy don’t bear the cost but reap the benefits. And they’ll hand wave some trickle down economics argument about GDP going up to say we all benefit.

Same exact logic as increasing everyone’s rates due to datacenter demand.

jakelazaroff•7h ago

To be clear: the issue is not the immigration itself but that we allow wealthy people and corporations to exploit immigrants, right?

vkou•7h ago

> taking money from the rich to enable more native births

Wealthier, more cohesive and communal and less-unequal societies, with better education and medical and child care support across the world have dramatically fewer native births than the US.

Unless you're planning on forcing women to have children at gunpoint[1], or banning all forms of contraception[2], or making everyone stupid and poor[3], there doesn't seem to any way to raise birthrates in industrialized societies.

Exploitation of migrant/temporary/undocumented workers is a separate problem.

---

[1][2][3] These do seem to all be on the roadmap for people whose political sails are most closely aligned with nativist anxieties. And I have not a drop of tolerance for any of them.

NekkoDroid•7h ago

Socialize the cost, privatize the profits.

That has been The American Way and will for the forseeable future remain that way. Neither party is really interested in fixing it, just one of them is less inclined in furthering it as much as the other.

supportengineer•6h ago

Be an executive or shareholder, or be gone with you

Analemma_•7h ago

Not all of these increasing costs are datacenter-related. Utilities really did systematically underinvest in infrastructure during the 2005-2020 period when US per-capita electricity use was basically flat, and the incoming expenses due to climate change plus a big reorientation towards solar/wind-- which needs a very different grid-- are real.

But I agree the closed-door deals with datacenter operators need to end, as well as the discounts/tax breaks for opening new ones. The "jobs" justification for these is a joke: datacenters create a couple dozen mediocre jobs in the area, and hundreds of well-paid ones way off in Silicon Valley. California reaps the rewards of you wrecking your own revenue base.

danans•7h ago

> The "jobs" justification for these is a joke: datacenters create a couple dozen mediocre jobs in the area, and hundreds of well-paid ones way off in Silicon Valley. California reaps the rewards of you wrecking your own revenue base.

Silicon Valley != California

Wall Street and its associated global oligarchy reap the rewards, not the average Californian, who pays the costs via higher climate change risks, insurance costs, and energy costs.

somanyphotons•7h ago

Its the thin strip of real estate owners along the San Francisco to San Jose corridor who reap all the rewards

danans•1h ago

> Its the thin strip of real estate owners along the San Francisco to San Jose corridor who reap all the rewards

They reap a lot, but hardly all the rewards.

Per capita the majority goes to VCs and the C-suite, and their wall street comrades.

throwaway313313•7h ago

Ah well, in reality the utilities try to raise the rates as much as they think they can get away with each year (they are limited only by what the respective state public utilities commissions allow), and this provides a convenient justification.

vkou•7h ago

> It would seem to me that the datacenters in question should be bearing the entire cost of the increase. Anything else is just subsidizing someone's business. The utilities are there to serve the people,

So, in a market economy, shortages and price increases don't just hit the marginal buyer.

I'm not sure why electricity prices should behave as you describe, but, say, gasoline prices should not.

pkulak•6h ago

Very true. I guess, in this case, we'd all like to see it divert from a perfectly free market. We manage capitalism in a million other places; it wouldn't be totally out of line. And it wouldn't be like rent control in NYC, or something else that distorts entire economies and ruins markets.

vkou•6h ago

There are far stronger arguments for rent price control, due to artificially constrained supply, power asymmetry, and cost of switching vendors, than there are for commodity price control.

pkulak•5h ago

> artificially constrained supply

Rent control artificially constrains supply...

> power asymmetry

This, and its cousin "information asymmetry" are generally applied to negotiations. Are you implying that housing isn't a fair market because landlords know so much more about their property than the buyers, and that price controls can solve that? I don't even think I agree with the premise, let alone the solution.

> cost of switching vendors

Sure, but price controls don't solve this. If you don't want the renter to shoulder the cost of moving, you make the landlord reimburse them for moving expenses, just like lots of cities do right now.

vkou•4h ago

Rent control doesn't make existing apartments get beamed up onto the Starship Enterprise, and supply of housing isn't primarily constrained by it. It's constrained by a lot of other things, and maybe when those other barriers are removed, and a bunch of houses get built, it might start being constrained by this one. But that's not where we are today.

I imply that the market is imbalanced because someone not having a place to live for a month is homeless, while a landlord not having a tenant for a month is a multi-millionaire who is out a few thousand bucks.

This wouldn't matter in markets with reasonable vacancy rates, but in markets with unhealthily-low vacancy rates, tenants have to eat whatever shit that trickles down to them, because they can't go somewhere else.

This should all be obvious to anyone who rents.

> Sure, but price controls don't solve this.

Not directly, no, but cost of switching (for both tenant and landlord) is a reason for why rental markets are quite weird, compared to commodity ones.

solatic•7h ago

> The utilities are there to serve the people

Are they owned by a democratically elected government? Do their profits return to the public purse? No? Then they don't exist to serve the people. They exist to serve their customers. As the public slowly switches to self-owned electric generation (i.e. rooftop solar + home batteries), the distinction between "the public" and "their customers" will increase.

It's an important distinction also because people need to remember that one of the reasons why it is difficult to on-line new generation is because of the bureaucracy put in place by that government which supposedly serves the people.

cogman10•6h ago

> Are they owned by a democratically elected government?

Depends on the utility, some of them are.

> the bureaucracy put in place by that government which supposedly serves the people.

It cuts both ways. There's obviously a problem with utility boards not listening to the voice of the people they represent but on the flip side these boards have been important brakes on utility companies going crazy with their prices.

ChrisMarshallNY•6h ago

Utilities aren't public projects, but they do have a fairly strict fiat.

They are granted a monopoly by the elected government (and regulated by all that overhead). In return, they need to make sure they serve the constituency.

toomuchtodo•6h ago

Electrical utilities are regulated and governed by public utility commissions or other consumer advocates in all but a few states.

https://pubs.naruc.org/pub/21475F72-1866-DAAC-99FB-1E3EE0593...

solatic•6h ago

That doesn't make them public companies or ensure that they serve the public interest; it ensures that they cannot abuse their natural monopoly. Placing handcuffs on someone to prevent them from abusing others is not the same as someone who loves you.

Examples that serve the public interest: charities, many non-profits

Other examples of private companies that are constrained against abusing their power (apart from the obvious other utilities like gas and water): automobile manufacturers did not add seatbelts and airbags out of the goodness of their hearts, nor did they voluntarily improve fuel efficiency. New York City landlords are prevented from raising rents on rent-controlled apartments, in spite of how much they would like to. Factories that would love to pollute our rivers and streams... the list goes on forever.

kube-system•5h ago

> Placing handcuffs on someone to prevent them from abusing others is not the same as someone who loves you.

I don't really think public representatives or public interest organizations love us either. They just have a different set of "handcuffs" that hold them accountable to their stakeholders, whether that be an obligation to donors, electors, etc.

> automobile manufacturers did not add seatbelts and airbags out of the goodness of their hearts

... just as our representatives don't fight for political change until broad public sentiment changes first.

toomuchtodo•7h ago

Show up to local planning meetings to impair the attempts to locate these in your area. Elect reps who will block them, and recall those who allow them.

https://www.datacenterwatch.org/report

> In Cascade Locks, Oregon, voters recalled two Port Authority officials in June 2023 for supporting a $100 million data center project from Roadhouse Digital. Following the recall election, the new board canceled the data center project in July 2023.

> In Warrenton, Virginia, residents voted out all town council members who supported Amazon’s proposed data center in the November 2024 election. The newly elected council, composed entirely of project opponents, now has the mandate to block the data center.

morngn•6h ago

But if it gets built one town over wouldn’t that be a double whammy: higher energy prices and no tax revenue to offset that increase? Seems like prisoners’ dilemma.

toomuchtodo•6h ago

You can only control what you can control. Default to action. The tax revenue and jobs are immaterial, based on the evidence.

You don't have to apply pressure forever, just until we're past the worst of the hype cycle.

bigbuppo•3h ago

It's always 1000* jobs.

* that's 1000 during construction, it's actually lights-out facility

michaelt•6h ago

IMHO the problem is:

OpenAI wants 3000W to run a high-end multi-GPU server to serve 1000 users paying $20/month each. They've got $20,000/month of income from the server, if they can power it.

Grandma wants 3000W to run her central AC, so she can live comfortably in Phoenix, Arizona. She's got $2,300/month of pension income.

If you try to raise the per-kWh price of electricity to reduce demand, OpenAI won't be the ones who get priced out. It'll be Grandma.

gambiting•6h ago

Every utility in the world does separate business and residential rates for this very reason.

bagels•6h ago

And they charge business 1/4 the rate!

gambiting•6h ago

Do they? Here in the UK it's been a huge problem for years now that residential rates have been locked to basically ~25p/kWh, but businesses have been paying 3 or 4 times that, it bankrupted so many places when their monthly bills literally went from like 2k a month to 8k a month. It's the reason why charging a car at home is so much cheaper than at public charging stations, they just cannot get the same rates since they are classed as businesses.

azinman2•6h ago

Opposite in the US

kelseyfrog•4h ago

Can I incorporate in order to take advantage of the reduced rate?

azinman2•3h ago

I’d assume you’d have to for your business/industrial zoned location.

ryao•6h ago

Commercial and industrial rates are lower than residential rates in the US and elsewhere. The bigger users are apparently better at negotiating rates while the residential customers take what they are given.

BobaFloutist•6h ago

Which leads to the hilarious edge case of saving money by charging your car at a Tesla Supercharger instead of at home, because they're paying that much less for electricity than you.

ben_w•6h ago

I left the UK in 2018 so this may be a strange question: I remember news about a massive but very brief energy price hike around when Russia began their "special operation" and everyone said "right, no more Russian gas", so is that hike still present?

I'd search, but the first few results get me geo-blocked because I'm not in the UK.

gambiting•6h ago

>>and everyone said "right, no more Russian gas", so is that hike still present?

Absolutely. Shell and BP still make record profits while home price cap has gone down a little bit but generally everyone is still paying through the nose for their electricity.

giantg2•6h ago

Seems more like 3/4 the rate here

nradov•6h ago

Grandma's AC doesn't run 24×7. Most utility districts have some sort of subsidy or rate limit program for low income customers.

Ultimately the only way to supply the constant power consumption demanded by data centers and keep consumer prices reasonable will be to build more fission power plants. This approach has several serious cost and safety issues but it's the only thing we're certain will work.

bryanlarsen•6h ago

> but it's the only thing we're certain will work.

Nothing, not even nuclear, has 100% coverage with 100% reliability. And anything less than 100% can be handled with statistics. The goal is 99.99%, because that's the grid reliability so there is no significant benefit for going over that. 99.99% reliability with a combo of wind, solar and batteries is cheaper than nuclear.

The cheapest is 95% solar/wind/batteries and 5% natural gas.

mapt•6h ago

We're using natural gas peaking so far, but this is actually still not that cheap.

I am of the attitude that even with no additional fossil fuel infrastructure constructed, we would be fine if we made an effort.

A mix for new generation of something like 70% solar/wind/batteries, 10% better grid interties, 10% expanded peaking hydro, and 10% a better system of load modulation, works just fine.

Load following with a market rate for things like water heaters, car chargers, and various industrial processes is something that's been implemented in other countries half-seriously, but only treated as an epithet or a scam here. To actually work, you can't just "Charge people a market rate" and expect them to fiddle with the breaker box, you have to actually integrate that feed into a decision-making algorithm run by home automation, which can make distinctions like "We need the car to be 90% full by 7AM, but we can adjust between charging at 1KW and charging at 6KW to minimize expected billing based on a minute to minute rate schedule. The water heater can range between 130F and 160F as required due to a mixing valve. The average dew point in the HVAC system needs to stay between 40F and 60F on a three-hourly basis, but can be modulated in ten minute increments according to demand." These sorts of interfaces need to be simple enough that Grandma can establish them conversationally.

Grid interties allow Los Angeles to sell Boston sunlight and Chicago to sell Houston wind.

Peaking hydro is just pumped storage minus the new pump and the new dam. An existing hydroelectric dam just gets refitted for twice as many generators and starts running on a 50% duty cycle, while allowing more variation in the water level.

gregbot•1h ago

Ive heard people claim that but the only example of decarbonizing to actually ever happen is France with nuclear and that was not particularly expensive (and happened 30 years ago)

bryanlarsen•1h ago

Wow, 3 wrong statements in one sentence!

- the carbon intensity of pretty much every country's grid has dropped dramatically in the last 25 years. First by replacing coal with natgas, then by adding renewables.

- nuclear cost France $2/W in 1982 dollars ($6.50 today). solar+batteries cost California $4/W in 2023 dollars.

- the late 70s was a lot more than 30 years ago. (I was born in the 70's, I wish I was still in my 30's).

mapt•6h ago

At $50/kwh of batteries + $50/kwh of battery install labor...

And at $150/kw of panels, $100/kw of inverters & copper, $100/kw of mounting, $100/kw of install labor, and $100/kw of real estate...

And at a 1W : 1kwh/yr (11%) duty cycle (my area should be 50% over that, but let's use conservative assumptions for low-maintenance vertical mounts)

And a level of conservativeness around power supply that reserves 60 hours of battery bank...

...

I can run a steady 1kw load (a GPU, let's say) for ~9kw of panels ($4950) + 60kwh of batteries ($6000), or $10,000. Capital cost of $10/watt.

Vogtle 3 and Vogtle 4 are going to end up averaging about 2.1GW for an estimated construction cost of perhaps $34 billion by the time everything is complete, or a capital cost of about $16/watt.

There is reason to expect the nuclear construction industry to drop in costs as it ramps up in size, but solar is already cost competitive here and it does not require the government to take over various costs like insurance, nor require the same political capital, approval process, or long financing period before initial payoff.

glitcher•6h ago

> Grandma's AC doesn't run 24×7

Except in this example she lives in Phoenix, so yes sometimes it absolutely does. At times the overnight low temp in the summer doesn't go below 90 degrees.

stefan_•6h ago

In a parallel world where OpenAI is profitable, anyway.

bodiekane•4h ago

Not the point you meant to make, but, maybe Grandma shouldn't live in a place that requires constant use of an air conditioner to be survivable.

Americans keep moving to places that are fairly inhospitable to humans - too hot, too little water, etc. It'd be nice to see migration patterns shift away from the currently popular deserts and hurricane-prone coasts.

cute_boi•4h ago

The situation is even grim if you look into Vegas.

khuey•4h ago

Grandma lives in Phoenix because Los Angeles made it impossible to build enough homes to keep housing costs reasonable near the temperate coast.

SllX•4h ago

The places with the nicest climates to build in also don’t want more building to happen and do everything in their power to prevent it, so people are migrating to those places, but people are also getting priced out of those places and moving to cheaper locales in the desert and in hurricane-prone areas.

Tadpole9181•1h ago

Yeah, just don't live where it's cold and don't live where it's hot! The corporations need that power!

msgodel•1h ago

At least here industrial users have to pay spot power prices so they immediately see large rises in cost if their demand/power factor messes with the grid.

supportengineer•6h ago

LOL what? The purpose of the utility is to maximize grift. The CEO, C-Suite, and shareholders get paid. You're just there to be sheared.

golergka•6h ago

That’s not how supply and demand work

_DeadFred_•5h ago

Public utilities are Public Utilities. Quasi monopolies treated differently and operated outside of 'supply and demand' capitalism.

https://en.wikipedia.org/wiki/Public_utility

golergka•5h ago

Prescriptive vs descriptive. I see absolutely no reason why public utilities shouldn’t operate on exactly the same principles, and I see plenty from real world examples on why they actually should.

bigbuppo•3h ago

Texas? Spain?

eagerpace•6h ago

Surely this is an extreme use case, but do individuals get to choose which companies get access to power? The same could be said about any business. And the same could be said about any consumable resource. It’s a slippery slope.

rufus_foreman•6h ago

>> The utilities are there to serve the people

Data centers are people, my friend.

varenc•6h ago

That makes sense in terms of fairness. But if the utilities are a capitalistic business selling a limited resource (energy), and FB/OAI are willing to pay a higher price for it, then it affects the price for everyone.

_DeadFred_•5h ago

Public utilities are.... public utilities. That is a specific thing that is not a standard 'capitalistic business'. They can't operate without special concessions/allowances. They can't be severed, but the 'squeeze every penny types' have severed the generation from the grid as if they two are separate, and allowed the 'generators' to behavior as it they aren't tied to a Public Utility grid.

ashoeafoot•7h ago

Just out of curiosity how much calories compared to a human, does a model need for an hour?

niek_pas•6h ago

I am by no means an expert but I would imagine the answer to this question depends a lot on what you mean by 'a model'. Do you mean 'all of (e.g.) OpenAI's compute over an hour'?

kube-system•5h ago

Humans run at about 100 watts. A 4090 GPU alone is 450 watts.

_DeadFred_•5h ago

Hence why I bring up potential energy savings is this other HN thread:

https://news.ycombinator.com/item?id=44524117

phkahler•7h ago

Data centers over 100MW should build their own power plants. This is not unheard of in other industries. It's on-site so doesn't require infrastructure upgrades either.

barbazoo•7h ago

And build them somewhere in the first place where there's good access to renewable energy so we don't end up solving this with gas or diesel generators.

no_wizard•7h ago

mini nuclear reactors would be ideal, assuming power demand can be formulated and accounted for ahead of time. On the surface of it, that should be more than possible.

asdff•6h ago

Too bad the US government doesn't let nuclear technology proliferate and improve

scarecrowbob•6h ago

I live in the west and drive past dozens of old wells and mines regularly. These are "owned" by companies that went out of business after extracting profits, but it's unlikely that anyone other than the government will ever have the funding to clean them up. If they ever do get cleaned up. Ocasionally they contaminate vast watersheds.

How could folks like me be assured that a similar situation wouldn't happen to all the waste from that proliferation of nuclear technology, in which companies just "vanish" leaving a mess for the rest of us to clean up? Like, a giant rotting solar field isn't a beautiful thing, but at least I am not worried about the cells breaking down and contaminating my water source...

am I just wrong that this is a concern?

asdff•6h ago

Spent nuclear fuel at least has some value unlike an old mine or field of trash or petroleum waste. So in some ways cleanup and management of waste is already economically incentivized.

no_wizard•4h ago

the difference is the utility function these things have.

If these companies go out of business, there is a market for these things, someone will snatch them up for what would be comparatively cheap. Its not waste or an exhausted natural resource.

Alternatively, you could simply have companies pay a small tax that directly funds disposable in the event of a shut down.

philipkglass•6h ago

"First concrete for US advanced reactor"

https://www.world-nuclear-news.org/articles/first-concrete-f...

"Westinghouse, Radiant to perform first US microreactor tests"

https://www.world-nuclear-news.org/articles/westinghouse-rad...

"Utah to host NuCube test reactor"

https://www.world-nuclear-news.org/articles/utah-to-host-nuc...

"Oklo named to supply microreactor for Alaska airbase"

https://www.world-nuclear-news.org/articles/oklo-named-to-su...

"New York Governor announces plans for new nuclear plant"

https://www.world-nuclear-news.org/articles/new-york-governo...

And the US completed its latest commercial power reactor just last year:

https://pris.iaea.org/PRIS/CountryStatistics/ReactorDetails....

Workaccount2•6h ago

I can tell you first hand that the regulatory strangulation the NRC has is far beyond any other agency.

You think aircraft have intense safety regulations and eye watering parts cost to meet it? Nuclear makes airplanes look like a dive bar of accountability. I really cannot overstate how insanely dense and paralyzing nuclear regs they are.

asdff•6h ago

We should have been getting those headlines in the 1950s not the mid 2020s. Thank the AEC for that.

azinman2•6h ago

They’re not yet ready for prime time, unfortunately.

bob1029•6h ago

There are also arguments from a disaster recovery perspective. You might be able to get away from the dirtier standby units if you have redundant prime capacity in something like a CCGT plant. Interconnection with the grid would only be needed for black start of the plant.

shmerl•7h ago

Well, let data centers pay for the amount used. Rates shouldn't go up.

metadat•6h ago

https://archive.today/YElXD

windows2020•6h ago

Is nuclear the only way out? Will the gov need to get involved? Will wind and solar, etc., wind down after?

slumberlust•5h ago

While I'd love to see nuclear projects more, I can't imagine any AI companies investing in something with a timeline that far out.

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