AI Data Centers Push US Power Bills to Record Highs

Bloomberg

Watch AI Data Centers Push US Power Bills to Record Highs - Bloomberg on Dailymotion

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00:00AI can drive up power prices in two main ways. It can drive up your power bills in two main ways.

00:04The first way, simple supply and demand. AI data centers suck up a huge amount of electricity,

00:10and that, just to really summarize, can make electricity more expensive for everyone else.

00:14And the second way is that it requires a lot of infrastructure. You need to build big transmission

00:18lines across the land. You've got to build big, sometimes big new generation to power all those

00:23data centers. And those costs, the way that utilities traditionally work, those costs are

00:27spread out among all customers. So those are two ways. You won't see a line item on your power bill

00:31that says AI data centers, but those are two ways that those are going to show up on your bill.

00:36So what can be done about this? I would have thought, you know, regulators are all over this

00:41industry and so forth. You know, you had a man in Baltimore. He's blind, living on social assistance,

00:47and all of a sudden he's paying or being forced to pay double or triple what he had previously been.

00:52And why is that not regulated to some extent? Yeah, it's the way that our system works. Any new

00:59load that's brought onto the system, the cost is spread out among everyone. That makes a lot of

01:03sense if it's, you know, a new house or a new subdivision. But the new load from these data

01:07centers is so big that it's kind of overwhelming the traditional ways we've done that. We've seen

01:12that in the PJM market. The Pennsylvania Governor Josh Shapiro recently held a summit in Philadelphia

01:18to say the way the market is working, the way that we've paid for reliability, reliable power in the

01:23past is not working. And he threatened to leave that power grid if a way to figure out these demand

01:29increases isn't figured out. You have a great chart in your story that shows where prices are rising

01:34the most across the map, right? And of course, the coasts are getting hit a lot harder than the

01:40middle of the country. But even, I mean, here we see Ohio up 9 percent, Iowa up 8 percent. Even

01:45the Midwest is taking a hit. Where is it the worst? So that chart's showing the percentage of

01:56electricity that's used by data centers in any given area. And that's going to be the highest in

02:01the data center hotspots like Virginia or Ohio. In terms of where prices are going up the most,

02:05you're seeing that in a lot of the same places. And this is not going to stop because data centers

02:10are going to consume more and more electricity. Bloomberg NEF's estimate is that by 2035,

02:17data centers will be using so much energy globally that if they were a country, they'd be fourth

02:22behind only China, the US and India. So what kind of response have you gotten to this story? Because

02:28I imagine it's pretty jarring to some people, especially in government who have an interest in

02:34keeping costs capped, right? One of the reasons President Trump was elected is because of the

02:39inflation that we saw under the Biden administration. It's really tough. It's really tough for regulators

02:44and politicians because obviously keeping prices low is a really important thing. But as my managing

02:50editor has has come to say, electricity is the new eggs. The inflation of electricity is sort of

02:56starting to become a political flashpoint the same way eggs were over the past couple years. And you

03:03could almost say eggs, you know, ushered Biden out of office. So politicians have a lot to worry

03:07about with power prices. What's next? We were talking with Jacob DeWitt earlier, the CEO of

03:13Oklo. You know, they're betting on nuclear power and smaller modular reactors. However, it's not going

03:23to come online for years. So how much longer are we looking at these elevated prices? Definitely for

03:29years to come. And I guess they'll continue to rise as we get more and more people using AI. That's what

03:37that's what Pennsylvania Governor Shapiro was was trying to address when he held this summit. That's

03:43what people in Baltimore, rich people and poor people are worried about as they see these prices

03:48keep going up. So there's no light at the end of the tunnel, dude? Utilities are definitely addressing

03:54it. Utilities are doing a lot of things. They are requiring data center developers, you know, the big

04:00tech firms that we all read about to pay for larger shares of the transmission costs and the other costs

04:05that they are that they are creating by bringing these data centers on. So there's definitely utilities

04:12are doing are doing things. But some things like the upward impact on wholesale power prices that are

04:18then passed on to customers. Those aren't addressed by those reforms. So definitely utilities, regulators

04:24and politicians are all making reforms and tweaks around this. But there is still some upward pressure

04:32that is going to keep pushing up customer bills.

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