Data Centers’ Hunger for Energy Could Raise All Electric Bills

Individuals and small business have been paying more for power in recent years, and their electricity rates may climb higher still.

That’s because the cost of the power plants, transmission lines and other equipment that utilities need to serve data centers, factories and other large users of electricity is likely to be spread to everybody who uses electricity, according to a new report.

The report by Wood MacKenzie, an energy research firm, examined 20 large power users. In almost all of those cases, the firm found, the money that large energy users paid to electric utilities would not be enough to cover the cost of the equipment needed to serve them. The rest of the costs would be borne by other utility customers or the utility itself.

The utilities “either need to socialize the cost to other ratepayers or absorb that cost — essentially, their shareholders would take the hit,” said Ben Hertz-Shargel, who is the global head of grid edge research for Wood MacKenzie.

This is not a theoretical dilemma for utilities and the state officials who oversee their operations and approve or reject their rates. Electricity demand is expected to grow substantially over the next several decades as technology companies build large data centers for their artificial intelligence businesses. Electricity demand in some parts of the United States is expected to increase as much as 15 percent over just the next four years after several decades of little or no growth.

The rapid increase in data centers, which use electricity to power computer servers and keep them cool, has strained many utilities. Demand is also growing because of new factories and the greater use of electric cars and electric heating and cooling.