Two Cents

I just got my latest electricity bill in the mail and surprise surprise, rates have gone up again.

Here in Texas where we live, the average consumer pays about 25% more per kilowatt hour than they did a few years ago, and Texas is hardly alone across - Why are all the lights off in - Oh, I'm trying to save money on our power bill.

- Well, we can't shoot an episode in the dark.

- Fine, but let's do this quick.

Electricity is more expensive now than ever for many Americans, all because of those faceless corporate box-like buildings filled with chips and servers.

- Chili's?

- Data centers.

(funky music) - You might find this hard to be but electricity consumptio in the US has been pretty flat over the last two decades.

This is despite a population inc of about 50 million people and the internet taking over practically every inch of our li There are probably more screens and devices in one house than there were on a whole block back then.

- A big reason for this is energy efficiency.

If you were around in the early you might remember that almost every new appliance came with a sticker verifying its low-power cred, and it wasn't just marketing.

A modern TV, for instance, uses only a fraction of the power that even smaller models in the - The US economy has also undergone a shift from manufacturing to more servi and white collar industries which tend to use less energy.

Together, these factors have kept demand for electricity fairly stable despite the increasing reliance on it in our day-to-day lives, but that is changing as we speak.

Power consumption has shot up over the last few years, and the main culprit seems to be data centers.

- Data centers are nothing new.

They're basically big buildings full of interconnecte computing systems and servers, and they've been the physical backbone of the internet ever since it was born.

What's different now is artificial intelligence.

Despite the radical brilliance of its designers, what we now call AI is fairly brute force technology.

Large language models have been on billions of pages of text with trillions of parameters just to answer simple questions "Help me name my D&D character."

With ChatGPT alone getting over 2.5 billion queries every day, that's a heck of a lot of processing power, which requires a heck of a lot o A typical hyperscale data center the industrial complex sized one favored by the biggest tech comp uses about as much energy a 100,000 households every year.

- Tech companies are pouring bil into the construction of new dat and it's putting a major strain on power grids.

For ordinary households in the r that translates into higher electricity bills.

Prices vary across the country, measured by locational marginal pricing points, also known as nodes.

A Bloomberg study found that of that saw price increases over the last five years, about 3/4 of them were within 50 of significant data center activ - And this is projected to only At the rate tech companies are investing in new data center the industry is predicted to dou its energy demands by 2035, making up around 9% of total electricity consumption in America.

Some say it will be the biggest increase in energy demand since the widespread adoption of air conditioning in the mid 20th century.

- Data centers tend to cluster i that already have the infrastructure they need, like high speed internet access, so certain regions get hit especially hard.

Virginia is home to about 150 hy with a power usage equivalen to over 10 million households.

The effects are felt as far away as Baltimore, where electricity prices have gone up 125%.

- Although Texas is also a hub of data center construction, our region's prices have been somewhat offset by the massive expansion in renewable energies like solar and wind, but that may not last long.

The One Big Beautiful Bill passed by Congress in 2025 dramatically cut incentives for green technology, which many experts say has the most potential for fulfilling our growing energ In its place, data centers may have to rely mo on more traditional sources like natural gas, nuclear, and e - But a large portion of the pri don't have anything to do with the actual sources of energy.

It's estimated that up to half of the average American's electr actually pays for delivery, which includes infrastructure up maintenance, and expansion.

- This has been especially expensive recently as old equipment has had to be r to withstand extreme weather eve caused by climate change.

A few years ago here in Texas, millions of homes, including ours, lost power for almost a week thanks to a cold snap that a Minnesotan would've considered a balmy day.

Since then, our grid operator ER has spent billions updating the so hopefully it won't happen aga When a utility invests money in infrastructure like this, it will typically spread that co amongst all of its customers over the following years, which results in a higher rate for everyone.

But this pricing structure can create situations that many may find unfair.

- Let's say a tech company wants to build a data center in that currently can't meet its expected power needs.

The local utility company eager for more revenue invests in an expansion of their production and delivery systems.

The cost of this expansion is pa to all of the customers evenly in the form of rate increases.

This meets that ordinary bill pa will help finance construction explicitly done to serve the needs of the data c - Tech companies counter that, like any development, data centers bring jobs and economic growth to the area.

Although once a data center is constructed, it requires a lot fewer workers than say a factory.

But there's an even deeper fear.

If construction of the data center is delayed or if the tech company decides not to build it after all, or say if the entire AI industry is a bubble that suddenly pops, all that new energ infrastructure will sit unused and the cost of building it will fall entirely on the utility's existing custom - This is why some utilities and local governments hav suggested that tech companies pa for at least some of the infrastructure costs upfront.

Others have pushed for different rate tiers for different categories of user so an ordinary homeowner would pay less per kilowatt hour than the power hungry data center up the road.

Tech companies, unsurprisingly, are somewhat resistant to these - But according to a study by Duke University, there may be another way to solve this problem, a way for data centers to actually lower people's electricity bills.

Sounds crazy, but it might be po because US energy grids are desi to operate at peak demand, even though that doesn't happen very often.

Here in Texas, the grid infrastructure has to be able to keep everyone's AC running on the hottest day of the summer and believe me, it gets hot.

But the other 364 days of the ye at least some percentage of that is not being used.

According to one of the study's even 80% of the time, a third of our power capacity, is technically not needed.

- If data centers could be desig to have flexible power needs, that is if they could use less energy when demand is high and more when demand is low, they could conceivably enter into a power grid without needing to raise peak capacity by much.

However, and this is key, as new customers on the grid, they would contribute to the cost of upkeep and mainte meaning a lower per kilowatt hour rate for everyone.

- However, when one of the largest grid operators in the country, PJM, commissioned a study on the viability of the idea, it found that data centers with flexible power needs was a "regulatory fiction."

As their grid was currently cons there would be no way t isolate data center power usage, or control the amount of electricity directed at them.

It would be completely up t the data centers to voluntarily and without guidance reduce their own power consumption, which few are designed to do.

- Here in Texas, ERCOT has more flexibility, which allowed the Texas legislature to pass a bill that gave the utility the author to essentially unplug data centers from the grid in times of emergency.

But if tech companies could find to bake this flexibility into the design of data centers, maybe by rerouting requests or onsite battery storage, they could sidestep a big obstacle in power management.

- Of course, this would mean a lot of different factions in government, business, environ and consumer advocacy groups coming together to hammer out a compromise, which is hard to imagine, but po - Or maybe the AI bubble will bu and all these dreams of fields of data centers will e - Well, if that happens, we'll have a lot more to worry a than our electricity bill.

- And that's our two cents