Latest / Commentary - TJ Meadows / Data Centers Make Power Bills Go Down!

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Data Centers Make Power Bills Go Down! · Commentary - TJ Meadows

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  Speaker 1: Screaming at the top of his lungs, wearing a look
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  Speaker 1: that could kill, if looks could kill, a boy of
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  Speaker 1: perhaps nine years stands among protesters chanting, no data centers.
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  Speaker 1: You'd think somebody had stolen his device and smashed it
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  Speaker 1: with a sledgehammer. He was so mad. Does he even
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  Speaker 1: understand what he's so angry about? I doubt it. If
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  Speaker 1: I hadn't seen it with my own eyes, I wouldn't
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  Speaker 1: have believed it. But he's hardly alone. Data centers have
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  Speaker 1: become the latest targets of myths and half-truths, including the
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  Speaker 1: claim that they inevitably drive up everyone's electric bill. The
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  Speaker 1: truth is more complicated. Electricity prices are affected by fuel costs.
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  Speaker 1: Natural gas and coal prices fluctuate. Our electric grid is old.
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  Speaker 1: Some of the infrastructure would qualify as a senior citizen,
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  Speaker 1: if it were a person. Poles, transformers, wire... And everything
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  Speaker 1: else needed to keep the lights on costs more than
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  Speaker 1: it did when the system was built. We have more
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  Speaker 1: storms these days. That means higher storm restoration costs. And
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  Speaker 1: don't forget inflation. All of these pressures exist with or
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  Speaker 1: without data centers. And here's the part you hear much
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  Speaker 1: less about, if anything at all. In the right circumstances,
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  Speaker 1: data centers can actually help lower electric rates. Consider Indiana.
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  Speaker 1: Indiana Michigan Power, an AEP utility, recently asked regulators for
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  Speaker 1: permission to reduce customer rates after already lowering them twice
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  Speaker 1: this year. You heard me right. This would be the
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  Speaker 1: third rate decrease this year. Why? The company says the
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  Speaker 1: plan is possible because of load growth and increased revenue
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  Speaker 1: from large customers, including data centers. That makes sense. Utilities
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  Speaker 1: have enormous fixed costs. Add a large customer consuming massive
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  Speaker 1: amounts of electricity, and that customer can help shoulder costs
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  Speaker 1: that otherwise must be recovered from everyone else. Now, that
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  Speaker 1: doesn't mean data centers get a free ride. Far from it.
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  Speaker 1: They should pay the costs they create. New generation, new transmission,
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  Speaker 1: and other infrastructure, or bring their own generation to the table.
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  Speaker 1: That's the principle of cost causation. The customer Causing the
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  Speaker 1: cost should pay the cost. PJM and utilities are moving
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  Speaker 1: in that direction. Get those protections right and data centers
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  Speaker 1: can pay for what they need while also contributing revenue
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  Speaker 1: toward costs otherwise borne by existing customers. Will that happen everywhere?
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  Speaker 1: Maybe not. It depends on available generation, transmission capacity, rate design,
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  Speaker 1: and regulatory policy. But the blanket claim that data centers
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  Speaker 1: automatically mean higher residential electric bills simply doesn't tell the
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  Speaker 1: whole story. So before joining the chorus or screaming no
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  Speaker 1: data centers like that young man, do your own research.
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  Speaker 1: Understand what's actually driving your electric bill. And don't let
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  Speaker 1: somebody on Facebook do your thinking for you.