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We Found the Hidden Cost of Data Centers. It's in Your Electric Bill [video]

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156 points xbmcuser | 6 comments | 04 Sep 25 12:33 UTC | HN request time: 0s | source | bottom
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jtchang ◴[04 Sep 25 13:44 UTC] No.45127225[source]▶
Great video on how the public is getting screwed on energy deals.

Basically large tech companies have the deep pockets to push up prices at electricity auctions. But why bid in public when you can do those deals in private. That's the first problem. All that needs to be out in the open.

What really irks me is that the market is so manipulated that we can't do anything about it. Think about NEM 3.0 vs 2.0. Putting data centers in their own rate class does make sense as the first step.

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1. gruez ◴[04 Sep 25 14:07 UTC] No.45127437[source]▶
>Basically large tech companies have the deep pockets to push up prices at electricity auctions. But why bid in public when you can do those deals in private.

Public utilities can't do the same? Moreover if the implication is that large tech companies are somehow getting great prices at the expense of residential users, what does that mean for the electric generators on the other end of this transaction? Why are they leaving money on the table by selling to large tech companies for cheap?

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2. jimbokun ◴[04 Sep 25 14:16 UTC] No.45127532[source]▶
Watch the video.

These companies are regulated and can only charge for the costs they incur plus a flat profit on top of that of 10% or so.

The datacenters give allow them to justify building a lot more capacity to serve them. That increases costs, which means that 10% added for profit is now a bigger number and they can give bigger returns to their shareholders. But those profits are extracted from the existing customers who now see higher bills to cover the costs of expanding capacity to serve the datacenters.

It's a question of aligning incentives.

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3. zahlman ◴[04 Sep 25 14:22 UTC] No.45127598[source]▶
(Why) are the datacenters not (also) charged (pun intended) for this?
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4. carlob ◴[04 Sep 25 14:30 UTC] No.45127685{3}[source]▶
Because they are given a sweetheart deal to attract them to that specific area. And that deal happens behind closed doors.
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5. zubiaur ◴[04 Sep 25 18:12 UTC] No.45130363[source]▶
The whole capped profit creates the distortions you illustrate.

The effect has a name: the Averch–Johnson effect, named after the Harvey Averch and Leland Johnson paper: "Behavior of the Firm Under Regulatory Constraint"

Fun stuff: https://en.wikipedia.org/wiki/Averch%E2%80%93Johnson_effect

6. bryan_w ◴[05 Sep 25 16:53 UTC] No.45140743{4}[source]▶
Can you link the .PDF with this evidence?