It seems that big money can overrule local government regulators at will.
Here in Nevada, (Warran Buffet owned) NV Energy already has approval for a "Demand Charge" that will increase rates for everyone, and further reduce the ridiculously low amount of money that consumers get for selling their excess solar power back to the grid.
The regulators didn't even resist, but there has now been so much backlash that they're finally scheduling public hearings after the fact. The announcement doesn't even mention the Demand Charge by name, and many consumers aren't even aware they they're about to be screwed.
One of the more obscene things about this new charge is that people with PV arrays will pay a fee for demanding more power from their own grid-tied systems.
It's not clear from the article whether this is just datacenters -- or if that is just the convenient boogeyman.
The grid operator for the northeast, according to my Governor, has been well-behind in building out infrastructure. Of course new datacenters cause more load. But so do new houses (we're building as many as we can) and electric cars, etc.
There is so much FUD going around SPECIFICALLY about data centers lately, that i’m dubious of anything i hear. it’s such a weird cultural phenomenon. Chronically online teenagers on Instagram making increasingly incorrect and absurd-sounding claims about water / energy usage. Comparatively barely anyone knew what a data center was 1-2 years ago.
Yep. 10000 gallons per query, spews out toxic water, contaminates the water supply, uses more power than an entire state, and on and on. I'm convinced it's a psyop to prevent the US's progress in tech. It's so over the top crazy and obviously false, but everyone I know is falling for it.
They might be wrong on this one, but check the history on cancer alley, or the legalized massive PFAS dumping in rivers the world over, that has now polluted the earth so thoroughly you cannot escape going over the maximum recommended body serum. Same for microplastics.
It is absolutely justified to be extremely suspicious of big corporate. They've earned it.
‘More power than an entire state’. Yep - take the Stratos data center project in Utah, the first phase of which is expected to consume 3GW and at full capacity is expected to be 9GW. By comparison, the entire state of Utah currently uses about 4GW.
I am curious how electricity is priced. Why are more and more utility providers charge based on ‘infrastructure cost’ or ‘fixed platform fee’ instead of usage fee?
Thank you for sharing this.
I get that the company making the capital investment wants to get a return of 10% from their investment.
The part I don’t understand is, why aren’t the return on investment being covered by the increased usage from the data centers (while the rate per usage stays flat)?
If the increase in usage (with rates staying flat) is insufficient to cover for the return on investment, then who is making the decision to take the risk for making these capital investment? The risk taker can definitely ‘pay’ for an over confidence in the market.
If it is because the increased usage of the grid as a whole reaches a step function requiring more investment, the system can have a gradually increasing usage price rate.
I am trying to find out if someone in the system is trying to eat up the benefits and publicly say “it’s because of AI” or maybe I am not understanding the situation well.
1) the first MW is cheaper to generate than the 100th. Newer plants. Cheaper fuels. More efficient. You run your good stuff always, for peak it’s on demand.
2) the cost of the old plants are already paid for, if adding a new data center requires a new plant; may add a big cost with a 50 year payback.
That's mostly incorrect. In Maryland, like in most places in the country, the distribution infrastructure is controlled by regulated monopolies that buy power on the market from generators. Your bills separate out the fees for usage and the fees for distribution, and the Maryland PSC has to approve both.
Yes, but the cost per kilowatt is at least partially based on capex recovery. That might be approved by the PSC but what they approve are capex projects and the recovery of them.
Because there's this belief that a for-profit company will naturally be more efficient. No idea if that's actually true in practice though. Or if efficiency > the profits the company takes.
I don't know of any large community ran utilities, just small ones. I'm guessing the scale starts being a problem eventually.
I'm not familiar with the Maryland power grid, but I've observed in other places that putting data centers in places with older / inadequate grids can / will require upgrades to handle the new load.
Within the US, energy prices for are typically split into supply and distribution rates with taxes and fees added to each of these. There are typically a large number of these fees that are passed through to the consumer, but just are bundled together to reduce confusion. An example fee is one for keeping power plants idle as extra capacity for when it's needed. Electricity has a nationwide market with different prices for spot prices vs long term although if you are big enough you can also get a direct contract to hedge your energy supply prices.
The complaint here is that PJM is spending money on upgrading the long range wires and passing that fee in a way that's not calculated for usage but instead it's likely divided evenly amongst member states. If you're upgrading wires in PA why should Maryland pay for that? These would taking in new/higher fees being passed to consumers.
The long range transmission lines are different than short term transmission lines. The long range ones appear someone to hit electricity from a power plant in California for a business in Baltimore.
Apparently not. Maryland residents didn’t sign any of these agreements in other states. Nor did their elected representatives. They were just presented with the bill to support the infrastructure in the other states because, you know, they’re so cool. And it doesn’t get any closer to the beltway than Maryland.
What’s crazy is the utility company admits that the infrastructure is for the growth in the other states. They admit Maryland won’t grow as fast. They concede Maryland needs less infrastructure. But still saddled Maryland residents with the extra bills for out of state data centers?
I mean, at least say it’s for Maryland. Just to make it look good? I don’t know? Make some kind of attempt to make it palatable.
I’m wondering if it’s just easier to pass the cost on to people in Maryland than it is in other states? Like is the regulatory environment with respect to this kind of thing more lax or something?
There has to be some kind of explanation. Because on the face of it, this just doesn’t look good. It makes ai and tech industry just seem like robber barons. And tech guys don’t need that right now.
We've been here before [1]. In that case, extra load on the grid meant the municipality needed to purchase more power (at higher prices), which raised everybody's prices.
Electricity supply is highly regulated. Prices for electricity are constrained and often set by state regulators. These are so-called "usage fees". But beyond that the utility is allowed to charge customers for infrastructure and transmissio and those fees are out of control. We recently had a court case where a North Carolina utility illegally overcharged customers but the judge didn't assign damages because legally the utility could just charge customers for those damages [2]. And the legislature passed laws to protect the utility as well.
This is going to get worse too because private equity is rapidly moving into this market and they know that capex can be entirely pushed onto customers with no recourse.
So the data centers tend to get sweetheart deals on electricity too. So while the total cost of electricity has gone up (per Mwh), they pay less pushing even more burden onto everyone else. Plus they get discounts on property taxes, energy tariffs and other taxes, as in the case of Kevin O'Leary's mega-DC in Utah.
But this state interconnect bill is another level of evil because it's pushing the costs onto states that have nothing to do with the data center and won't get any "benefit" (there is no benefit) anyway.
What we need are laws that make these projects pay for their own infrastructure. This might cause them to build near power sources. Great. Away from people, mostly.
The level of regulatory corruption here is actually sickening. Take Elon's Grok DC in Memphis that exploits local laws against clean air by using "mobile" gas turbines in the city of Memphis.
I'll be the first to complain about Texas being on its own energy grid and the dumpster fire of resultant things that happen because of it, but it is worthwhile to call out that this sort of thing is not possible in Texas because of that.
It seems that big money can overrule local government regulators at will.
Here in Nevada, (Warran Buffet owned) NV Energy already has approval for a "Demand Charge" that will increase rates for everyone, and further reduce the ridiculously low amount of money that consumers get for selling their excess solar power back to the grid.
The regulators didn't even resist, but there has now been so much backlash that they're finally scheduling public hearings after the fact. The announcement doesn't even mention the Demand Charge by name, and many consumers aren't even aware they they're about to be screwed.
One of the more obscene things about this new charge is that people with PV arrays will pay a fee for demanding more power from their own grid-tied systems.
https://www.nvenergy.com/publish/content/dam/nvenergy/bill_i...
[delayed]
It's not clear from the article whether this is just datacenters -- or if that is just the convenient boogeyman.
The grid operator for the northeast, according to my Governor, has been well-behind in building out infrastructure. Of course new datacenters cause more load. But so do new houses (we're building as many as we can) and electric cars, etc.
There is so much FUD going around SPECIFICALLY about data centers lately, that i’m dubious of anything i hear. it’s such a weird cultural phenomenon. Chronically online teenagers on Instagram making increasingly incorrect and absurd-sounding claims about water / energy usage. Comparatively barely anyone knew what a data center was 1-2 years ago.
Yep. 10000 gallons per query, spews out toxic water, contaminates the water supply, uses more power than an entire state, and on and on. I'm convinced it's a psyop to prevent the US's progress in tech. It's so over the top crazy and obviously false, but everyone I know is falling for it.
They might be wrong on this one, but check the history on cancer alley, or the legalized massive PFAS dumping in rivers the world over, that has now polluted the earth so thoroughly you cannot escape going over the maximum recommended body serum. Same for microplastics.
It is absolutely justified to be extremely suspicious of big corporate. They've earned it.
‘More power than an entire state’. Yep - take the Stratos data center project in Utah, the first phase of which is expected to consume 3GW and at full capacity is expected to be 9GW. By comparison, the entire state of Utah currently uses about 4GW.
> increasingly incorrect and absurd-sounding claims about water
Wait till they hear about big Ag and how they use, abuse and ‘pay’ for water, while farming deserts.
I am curious how electricity is priced. Why are more and more utility providers charge based on ‘infrastructure cost’ or ‘fixed platform fee’ instead of usage fee?
because as part of their legal monopolies they are only allowed to charge a "reasonable" usage fee.
ETA: utility companies make profit on capex, not opex
Only allowed to charge “reasonable” usage fee means no other non-usage fee allowed or it is purposely designed to allow other kinds of fees?
https://www.nrdc.org/bio/jc-kibbey/utility-accountability-10... To be clear this only about some utility companies.
Thank you for sharing this. I get that the company making the capital investment wants to get a return of 10% from their investment. The part I don’t understand is, why aren’t the return on investment being covered by the increased usage from the data centers (while the rate per usage stays flat)?
If the increase in usage (with rates staying flat) is insufficient to cover for the return on investment, then who is making the decision to take the risk for making these capital investment? The risk taker can definitely ‘pay’ for an over confidence in the market.
If it is because the increased usage of the grid as a whole reaches a step function requiring more investment, the system can have a gradually increasing usage price rate.
I am trying to find out if someone in the system is trying to eat up the benefits and publicly say “it’s because of AI” or maybe I am not understanding the situation well.
Two things I’d think
1) the first MW is cheaper to generate than the 100th. Newer plants. Cheaper fuels. More efficient. You run your good stuff always, for peak it’s on demand.
2) the cost of the old plants are already paid for, if adding a new data center requires a new plant; may add a big cost with a 50 year payback.
It's because it's a weird mix of subsidies, price controls, regulations and bureaucracy that has completely distorted the market incentives.
That's mostly incorrect. In Maryland, like in most places in the country, the distribution infrastructure is controlled by regulated monopolies that buy power on the market from generators. Your bills separate out the fees for usage and the fees for distribution, and the Maryland PSC has to approve both.
Yes, but the cost per kilowatt is at least partially based on capex recovery. That might be approved by the PSC but what they approve are capex projects and the recovery of them.
Perhaps utilities should be state owned where any profits are used to offset the tax load on the citizens..
Because there's this belief that a for-profit company will naturally be more efficient. No idea if that's actually true in practice though. Or if efficiency > the profits the company takes.
I don't know of any large community ran utilities, just small ones. I'm guessing the scale starts being a problem eventually.
Here's some very recent writing that will help you understand what's happening:
https://www.organizedmoney.fm/p/how-private-equity-is-drivin...
https://www.thebignewsletter.com/p/data-centers-arent-the-ma...
Kind of stuff that can radicalize a young family struggling to make ends meet...
I'm not familiar with the Maryland power grid, but I've observed in other places that putting data centers in places with older / inadequate grids can / will require upgrades to handle the new load.
Within the US, energy prices for are typically split into supply and distribution rates with taxes and fees added to each of these. There are typically a large number of these fees that are passed through to the consumer, but just are bundled together to reduce confusion. An example fee is one for keeping power plants idle as extra capacity for when it's needed. Electricity has a nationwide market with different prices for spot prices vs long term although if you are big enough you can also get a direct contract to hedge your energy supply prices.
The complaint here is that PJM is spending money on upgrading the long range wires and passing that fee in a way that's not calculated for usage but instead it's likely divided evenly amongst member states. If you're upgrading wires in PA why should Maryland pay for that? These would taking in new/higher fees being passed to consumers.
The long range transmission lines are different than short term transmission lines. The long range ones appear someone to hit electricity from a power plant in California for a business in Baltimore.
who is actually signing off on these agreements to build it, knowing the bill goes to the locals? seems openly shady
Those closest to the beltway…
Apparently not. Maryland residents didn’t sign any of these agreements in other states. Nor did their elected representatives. They were just presented with the bill to support the infrastructure in the other states because, you know, they’re so cool. And it doesn’t get any closer to the beltway than Maryland.
What’s crazy is the utility company admits that the infrastructure is for the growth in the other states. They admit Maryland won’t grow as fast. They concede Maryland needs less infrastructure. But still saddled Maryland residents with the extra bills for out of state data centers?
I mean, at least say it’s for Maryland. Just to make it look good? I don’t know? Make some kind of attempt to make it palatable.
I’m wondering if it’s just easier to pass the cost on to people in Maryland than it is in other states? Like is the regulatory environment with respect to this kind of thing more lax or something?
There has to be some kind of explanation. Because on the face of it, this just doesn’t look good. It makes ai and tech industry just seem like robber barons. And tech guys don’t need that right now.
It's for "the grid", of which Maryland is a part, so it supposedly derives some benefit.
And since the grid is being updated to accommodate new paying customers, Maryland will benefit from lower future prices. Right? Right?
We've been here before [1]. In that case, extra load on the grid meant the municipality needed to purchase more power (at higher prices), which raised everybody's prices.
Electricity supply is highly regulated. Prices for electricity are constrained and often set by state regulators. These are so-called "usage fees". But beyond that the utility is allowed to charge customers for infrastructure and transmissio and those fees are out of control. We recently had a court case where a North Carolina utility illegally overcharged customers but the judge didn't assign damages because legally the utility could just charge customers for those damages [2]. And the legislature passed laws to protect the utility as well.
This is going to get worse too because private equity is rapidly moving into this market and they know that capex can be entirely pushed onto customers with no recourse.
So the data centers tend to get sweetheart deals on electricity too. So while the total cost of electricity has gone up (per Mwh), they pay less pushing even more burden onto everyone else. Plus they get discounts on property taxes, energy tariffs and other taxes, as in the case of Kevin O'Leary's mega-DC in Utah.
But this state interconnect bill is another level of evil because it's pushing the costs onto states that have nothing to do with the data center and won't get any "benefit" (there is no benefit) anyway.
What we need are laws that make these projects pay for their own infrastructure. This might cause them to build near power sources. Great. Away from people, mostly.
The level of regulatory corruption here is actually sickening. Take Elon's Grok DC in Memphis that exploits local laws against clean air by using "mobile" gas turbines in the city of Memphis.
[1]: https://newsroom.haas.berkeley.edu/research/power-hungry-cry...
[2]: https://www.wcnc.com/article/news/local/no-refunds-for-duke-...
I'll be the first to complain about Texas being on its own energy grid and the dumpster fire of resultant things that happen because of it, but it is worthwhile to call out that this sort of thing is not possible in Texas because of that.