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

> Consider, if people get the new housing developments that they want, that would also add load to the system.

It's a matter of scale and efficiency. Housing also adds (full-price) customers new taxpayers. A major problem with housing development is that low density (e.g. single-family zoned suburbs) are net-negative contributors. (But this effect is primarily seen with infrastructure like roads)

> Any model you do that tries to prevent this is essentially rent stabilization for early members.

The problem with datacenters is twofold:

1) It's a demand-shock. Because of the rapid rollout of datacenters, energy production and transmission capacity simply can't scale up. This causes prices to spike locally.

2) 'Industrial' electricity like this tends to pay very cheap rates, leading to residential electricity customers subsidizing them. Especially as such industry tends to be given high tax & other incentives.

> Any model you do that tries to prevent this is essentially rent stabilization for early members. And that has a pretty good track record of not being a good idea.

A question here is whether or not we're in a datacenter construction bubble. (To anyone who says we're not: Nvidia's stock price has soared more than Cisco's during the dotcom bubble.)

If you're in charge of a major electricity company, are you going to sign off on major expansion investments right now, knowing that it will take 5-10 years?

A lot of these datacenters are not owned and operated by Big Tech itself, but instead disposable companies like CoreWeave. If there's a bubble, it'll pop, and these companies will just go bankrupt. The power purchase agreement'll be worthless then.

My understanding, the last time rising electric costs came up, is that a large part of the cost increase was finally paying for the infrastructure maintenance that companies put off for a time. Is that no longer the case?

That is, it is specifically the transmission and distribution network that is driving costs increases. Per the crappy AI answer "Electricity distribution costs now often exceed the cost of electricity generation for U.S. utilities, with transmission and distribution (T&D) costs potentially comprising over half of a customer's energy bill, up from about one-third previously."

I should say, I have no problem thinking data centers may need to pay more. If only because they are probably able to. My assertion is just that it is misleading to pin them as THE reason costs have gone up. It is far more complicated than that.

> Is that no longer the case?

Generally (but there are exceptions) in the US they have not gotten better. It's just that datacenter demand has eclipsed the effect of that.

> My assertion is just that it is misleading to pin them as THE reason costs have gone up. It is far more complicated than that.

It's not so much that they are the sole cause, but that their effects (especially on local scales) are 1-2 orders of magnitude larger than all other causes, so people focus on this matter.

Do you have numbers showing that data centers have eclipsed this? Quickly looking at search results on this it seems transmission/delivery is estimated to be half of a consumer's bill. Even the high estimate for increased costs from data centers has the increase at less than a quarter of the bill.

Not nothing. And if we can do things to reduce this, I'm game to do that. But I can't get behind the rhetoric that they are eclipsing other cost drivers.

One particular datapoint to watch is auction prices for production capacity as these are the most immediate market. Those have jumped, with PJM's +800% in 2024 and +22% (22% from 2024->2025, $28.92 -> $329.17 or +1038% total over 2023 -> 2025) https://www.reuters.com/business/energy/biggest-us-power-gri...

We (Well, the article does it for us as well) can identify that this market jump is driven primarily by increased demand rather than lower capacity, as the amount of capacity sold has increased. (Covering ~50% of the new demand)

These prices do not immediately translate into residential fees, there's a lot of financial engineering in between the auction and customer contracts (F in chat for the counterparty of the hedge), but at the end of the day you can't sell $500 of power for $5 so the increased cost will worm their way through to residential consumers eventually. One particularly annoying thing is that this isn't a consistent amount of time by region; Some people are seeing 3x electricity bills already, for others their power company may have more strongly hedged against price increases.

I confess I don't know how to contextualize this. The article says that PJM claims this should be a 1.5% to 5% increase in bills for folks. And it notes this is the first time capacity has been added in the last four auctions.

Is your contention that we a) not believe this will only have an "at most 5% increase" or b) predict that it will be more dramatic in the future?

I'm also curious where you are getting the 3x electric bills claim. The largest bill jumps I'm aware of were in CA and were largely related to fires. That and general grid upgrades.