Data centers could lower power bills. Energy utilities won't.

Governance Cybernetics

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Industrial & Innovation Policy<br>Data centers could lower power bills. Energy utilities won't.<br>The regulatory contract pays them to grow rate base, not lower bills.

Dave Deek<br>May 20, 2026

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Twenty-seven gas turbines run day and night without an air permit. 2 miles away are about six public schools, including an elementary school. They are trucked in to power xAI’s Colossus 2 data centre across the state line in Mississippi. The nearby Boxtown neighbourhood already breathes a cancer risk roughly four times the national average, and the turbines could emit more than 1,700 tons of nitrogen oxides a year.<br>Likely the largest industrial NOx source in a metro area already failing national smog standards. Mississippi regulators have nonetheless permitted an even larger facility at the same site. The turbines run because the regional grid takes five to seven years to deliver new interconnections, and AI capital-expenditure schedules do not.<br>A steady, high-load-factor customer spreads the grid’s fixed costs across a broader base. In theory, it should lower rates for the households around it.<br>It is also, in the United States in 2026, mostly just theory. Wholesale prices near significant data-centre activity have risen as much as 267% over five years, and household prices rose 7.4% in the year ending February 2026. PJM’s capacity-market clearing prices have hit their FERC-approved cap for three auctions running. Pew estimates that data-centre capacity costs alone are adding $18/month to residential bills in western Maryland and $16/month in Ohio, before transmission and distribution buildout. The industry isn’t doing what it says it could.<br>Ninety years earlier, in the same country, a federal agency that had not existed six years before was stringing electric lines to Tennessee farms whose owners had never owned a refrigerator. The Tennessee Valley Authority, chartered in 1933, employed more than nine thousand workers within a year, building dams and electrifying a region whose per-capita income was half the national average. The Rural Electrification Administration, founded in 1935, brought power to most American farms within fifteen years.<br>What could data centres do?

Data centre actors accounted for roughly half of U.S. corporate clean-energy procurement in 2024, and the IEA’s Energy and AI report documents them as the largest single class of corporate clean-power buyers in the world. You need demand for energy if you want to build out more energy infrastructure, especially clean energy infrastructure.<br>Electricity systems carry large fixed costs and recovered across whatever load shows up to pay them. A new subdivision adds load that peaks at dinner and disappears overnight. A data centre runs 24/7 at 90%-plus capacity factor. The data centre is the better customer on cost recovery alone.<br>What hyperscalers want is a lot of cheap power on timelines that match their capex schedules. They do not care if it’s clean energy or fossil fuels. They want compute, and they want it cheap. The cheapest compute in 2026 is powered by solar plus storage plus, where available, nuclear. You think that a rational hyperscaler in a working electricity system would invest in clean generation and sign contracts that anchor utility investment. It would absorb cost overruns so its neighbours’ bills did not move. Some of them do.<br>You also think that ones who have a bit of political influence would encourage the government to make the investments for them, in a way that doesn’t draw ire from the public.<br>So why don’t they all?<br>What do hyperscalers do instead?

The hyperscaler arriving in a new region can spend years on interconnection negotiations and absorb cost overruns so its neighbours’ bills do not move. Or the hyperscaler can route around the institution entirely. It can build behind-the-meter gas turbines, sited where permitting frictions are lowest, and run them while the permits are pending or without seeking them at all. xAI in Boxtown is the irresponsible example of this. It sits there not because the architecture forced it to, but because its principals do not believe the surrounding energy environment is their problem. The political economy so far signalled that they are right.<br>This isn’t just the xAI turbines in Boxtown. We have the 4.5 GW Crusoe gas expansion in Abilene, the 400 MW Williams “Socrates” facility serving Meta in Ohio, and Microsoft’s $7 billion Chevron-built gas plant in the Permian Basin.<br>Cleanview tracks 56 GW of behind-the-meter capacity across 46 sites and now projects 30% of new data-centre capacity will be served on-site. Almost all are up from...