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Power AI United States

As Data Centers for AI Strain the Power Grid, Bills Rise for Everyday Customers (msn.com) 27

While Amazon, Google, and other companies build new data centers — sometimes for their AI projects — parts of America "are facing higher electric bills," reports the Washington Post: The facilities' extraordinary demand for electricity to power and cool computers inside can drive up the price local utilities pay for energy and require significant improvements to electric grid transmission systems. As a result, costs have already begun going up for customers — or are about to in the near future, according to utility planning documents and energy industry analysts. Some regulators are concerned that the tech companies aren't paying their fair share, while leaving customers from homeowners to small businesses on the hook. In Oregon, electric utilities are warning regulators that consumers need protections from rising rates caused by data centers. From Virginia to Ohio and South Carolina, companies are battling over the extent of their responsibility for increases, attempting to fend off anger from customers. In the Mid-Atlantic, the regional power grid's energy costs shot up dramatically, and data centers are cited as among root causes of rate increases of up to 20 percent expected in 2025...

The tech firms and several of the power companies serving them strongly deny they are burdening others. They say higher utility bills are paying for overdue improvements to the power grid that benefit all customers. In some cases, they said in response to criticism from consumer and business advocates that they are committed to covering additional costs. But regulators — and even some utilities — are growing skeptical.

A jarring example of fallout on consumers is playing out on the Mid-Atlantic regional power grid, called PJM Interconnection, which serves 13 states and D.C. The recent auction to secure power for the grid during periods of extreme weather and high demand resulted in an 800 percent jump in the price that the grid's member utilities had to pay. The impact will be felt by millions by the spring, according to public records. Power bills will increase as much as 20 percent for customers of a dozen utilities in Maryland, Ohio, Pennsylvania, New Jersey and West Virginia, regulatory filings show. That includes households in the Baltimore area, where annual bills will increase an average of $192, said Maryland People's Counsel David Lapp, a state appointee who monitors utilities. The next auction, in 2025, could be more painful, Lapp said, leaving customers potentially "looking at increases of as much as $40 to $50 a month...."

Advocates cite another source of cost-shifting onto consumers: discounted rates that power companies and local government officials use to entice tech companies to build data centers... Google worked out a deal with Dominion Energy, blessed by regulators, to pay 6 cents per kilowatt hour for its power. That is less than half of what residential customers pay, as well as substantially less than is paid by businesses...

The article points out that in Pennsylvania, "Amazon's novel plan to fuel a data center from a reactor at the nearby Susquehanna nuclear plant is now in jeopardy, after regulators blocked it Friday. They cited potential impact on consumers as among their concerns. The plan threatens to leave other ratepayers stuck with a bill of $50 million to $140 million, according to testimony from [power utility] AEP and utility conglomerate Exelon."

And meanwhile, one Virginia retiree complained about a proposed $54 million transmission line and substation for an Amazon data center. "They are already making money hand over fist, and now they want us to pay for this?

As Data Centers for AI Strain the Power Grid, Bills Rise for Everyday Customers

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  • Not one dime (Score:5, Insightful)

    by Lije Baley ( 88936 ) on Saturday November 02, 2024 @02:49PM (#64914897)

    The tech firms should be paying for any and all of this work and a for a huge future cleanup and maintenance fund -- UP FRONT. Regulators should ensure that there is ZERO chance of anyone else getting stuck with the bill when this goes bust. And this still applies to "AI now" believers, since even if they are right, improvements in efficiency could still massively change the situation at some point.

  • Mining the Commons (Score:5, Insightful)

    by RossCWilliams ( 5513152 ) on Saturday November 02, 2024 @02:57PM (#64914909)

    This is just another example of how easy it is to "mine" common public services for profits. Instead of building a power plant, you buy a share of cheap existing public power and force everyone to pay for the additional power you will need.

    This is not fixable in our current political system. We each get one vote to influence the selection of one member of congress. Those with money can spend unlimited amounts to influence the selection of all 435 members.

  • Lets not forget crypto mining. At least AI processing has some sort of intellectual benefit. I'm curious of the order of magnitude greater in which AI specific applications are using more energy compared to the total of crypto mining. That contribution can't be denied when putting the costs to the common folk for the excess infrastructure spending. Among many other things.
    • Personally, I don't give a da*n about AI OR crypto mining. Let the companies that came up with this sh*t and are profiting from it pay the costs for power upgrades.
  • I can see some good reasons for siting data centers near nuclear power stations.

    1) Data center power consumption is pretty constant, and nuclear power is well suited to constant loads. You can't just start and stop a reactor.
    2) Nuclear plants are situated where there is abundant cooling water, that's good for data centers too
    3) Nobody wants to live or work near a nuclear plant, that means lower land costs for building the data center and fewer nimbys.
    4) Less cost installing h

    • There are very few places in the US with excess power available. Under high load, every area is pretty much maxed out or even over-subscribed. ALCOA used to build their own plants. Maybe its time datacenters did the same. If they choose to build nuclear, fine. If they choose to build solar/wind with batteries fine. But let the datacenter owner come up with the capital to build it.
    • The entire premise of the article is bogus, as you say, datacenters are rather fixed consumers and you know years in advance when you build them what you will need. The power grid is strained in certain places because governments run them in many places if not fully co-opt the private ones through regulations and so they canâ(TM)t build out.

      Biden-Harris has been putting limits on new gas plants and attempting to backfill it with solar/wind that hasnâ(TM)t realized and never will be stable base loa

  • by silentbozo ( 542534 ) on Saturday November 02, 2024 @04:02PM (#64914977) Journal

    In California, utilities are regulated. The rules dictate what the utilities can and can't do, with an eye toward trying to maintain stable prices at a benefit to consumers.

    Unfortunately, because of how the rules are written... the utilities are incentivized in ways to make more money within that framework, rather than actually benefit consumers.

    https://www.nrdc.org/bio/jc-ki... [nrdc.org]

    (the NRDC example uses Illinois, but from what I have gathered, California works in a very similar manner)

    "Utilities can collect their spending on operating expenses from you and me, on our bills. In practice, they almost always cover their costs, but they don’t get anything extra beyond what they spent. So, if a utility spends $100 on operating expenses, it collects $100 back, spread out across all the bills people pay to that utility. They don’t profit.

    But with capital expenses—that is, physical infrastructure, like poles and wires—utilities can collect the money they invested plus an additional percentage they keep as profit. So, if a utility spends $100 on capital expenses, they might collect $110 on our bills, with $100 paying for the wires and poles and $10 going towards profits..."

    "...On the other hand, the only way utilities make profits is by spending money on physical infrastructure (e.g., poles and wires). The law says they should spend the least they can while providing quality, environmentally safe service, but when it comes to their bottom line, utilities are incentivized to make more costly investments. The more they spend on physical infrastructure, the more profit they stand to make..."

    So yes, large data centers (as with any major industrial customer) buying electricity on the open market, has the potential of raising prices for residential users (and other industrial and commercial users). But the problem is not the datacenters. Any effort to re-industrialize America (and bring back jobs exported overseas) is going to to require energy. Hell, building more housing is going to require more energy. The problem is, the utilities are not incentivized to ever lower rates.

    "...Here’s a hypothetical example that highlights the issue: several large new apartment buildings have been built in a neighborhood, so the area is now using more electricity than the local electric grid is able to provide. There are two ways to address this: one is a $50 million project that brings more power into the neighborhood by building new high-tension wires and new substations; the other is a $10 million project to reduce demand by implementing energy efficiency measures and installing batteries. For this example, let’s say the utility has a return on equity of 10%, meaning that they make a 10% profit on whatever they spend on capital expenses.

    If the utility chooses to build the $10 million project, it would make $1 million in profit, and meet their public charge of providing “least-cost” service. But if it chooses the $50 million project, it will make $5 million in profit. They haven’t provided the “least-cost” solution, but they’ve made more money. Their shareholders will probably like this better, but it will also leave customers paying more than they should...."

    I don't know if there's a way around this, absent reforming the regulations to incentivize behavior that leads to less expensive, more reliable power for all users, or allowing the formation of power companies that are not regulated, and can operate outside of the the existing regulatory structure. People/businesses who install their own batteries and solar panels, for example, are de-facto example of independent power companies, who can decide whether they want to to flow power back to the local utility, or pull power from the utility, depending on what makes sense. They also have the option of completely cutting ties with the local power utilit

    • Regarding discounted rates:

      "Advocates cite another source of cost-shifting onto consumers: discounted rates that power companies and local government officials use to entice tech companies to build data centers... Google worked out a deal with Dominion Energy, blessed by regulators, to pay 6 cents per kilowatt hour for its power. That is less than half of what residential customers pay, as well as substantially less than is paid by businesses... "

      This sounds super fishy unless Google is underwriting the add

    • I also want to point out that just 7 years ago, the LA Times was running an article about a glut of power in California (and the corresponding rise in costs borne by ratepayers), due to overinvestment in new power generation facilities by regulated utilities...

      https://www.latimes.com/projec... [latimes.com]

      "...California regulators have for years allowed power companies to go on a building spree, vastly expanding the potential electricity supply in the state. Indeed, even as electricity demand has fallen since 2008, Cali

  • Make money by selling the excess.
  • ... our state is moving to protect consumers' right to access [knkx.org] alternative energy sources. Like natural gas.

  • Maybe it is time we learn to live with the seasons again. Much wind and solar energy? Let the datacenters run overtime. Train new models, run sheduled tasks that were low priority. High use, little green energy? Make the user pay a big premium.
    Yes, that million dollar equipment will be idling a lot then... Yes, it will be more chaotic. Yes we will not get what we want instantly. The horror.

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