Microsoft, Google, Meta, and Amazon Fight Calls to Pay More for Electric Grid Updates (msn.com) 66
The Washingon Post reports that a regulatory dispute in Ohio may help answer a big question about America's power grid: who will pay for the huge upgrades needed to meet soaring energy demand "from the data centers powering the modern internet and artificial intelligence revolution?"
Google, Amazon, Microsoft and Meta are fighting a proposal by an Ohio power company to significantly increase the upfront energy costs they'll pay for their data centers, a move the companies dubbed "unfair" and "discriminatory" in documents filed with Ohio's Public Utility Commission last month. American Electric Power Ohio said in filings that the tariff increase was needed to prevent new infrastructure costs from being passed on to other customers such as households and businesses if the tech industry should fail to follow through on its ambitious, energy-intensive plans. The case could set a national precedent that helps determine whether and how other states force tech firms to be accountable for the costs of their growing energy consumption... The energy demands of data centers have created similar concerns in other hot spots such as Northern Virginia, Atlanta and Maricopa County, Arizona, leaving experts concerned that the U.S. power grid may not be capable of dealing with the combined needs of the green energy transition and the computing boom that artificial intelligence companies say is coming...
Energy customers must sometimes make a monthly payment to a utility that is a percentage of the maximum amount of electricity they predict that they could need. In Ohio, data center companies had agreed to pay 60 percent of the projected amount. But in May, the power company proposed a new, 10-year fee structure raising the charges to 90 percent of the expected load, even if they don't end up using that much. The major tech companies — all of whom are increasing spending on data center infrastructure to compete in AI — strenuously opposed the proposed contract in documents filed last month... According to testimony from AEP Ohio Vice President Lisa Kelso, there are 50 pending requests from data center customers seeking electric service at more than 90 sites, a potential 30,000 megawatts of additional load — enough to power more than 20 million households. That additional demand would more than triple the utility's previous peak load in 2023, she said. Between 2020 and 2024, the data center energy load in central Ohio increased sixfold, from 100 to 600 megawatts, her testimony reads. By 2030, that amount will reach 5,000 megawatts, according to the utility's signed agreements, she testified...
Meeting that demand will require AEP Ohio to build new transmission lines, an expensive and time-consuming process... Chief among the power company's concerns, according to the documents, is what will happen if it invests billions of dollars into new grid infrastructure only for the data centers to leave for greener pastures, or for the AI bubble to burst and the facilities to need much less power than initially projected. If the power company spends big on new infrastructure but the power demand it was built to serve doesn't materialize, other customers — including business and residential payers — will be stuck with the bill, the utility said... AEP Ohio's testimony in the case also questions whether data centers bring as much to local communities as factories or other high-energy-load businesses. Since 2019, non-data center businesses have created approximately 25 jobs for every megawatt of power requested, while data centers have created less than one job per megawatt, according to Kelso's testimony.
The tech companies rejected this criticism, saying the number of jobs they create is not relevant to how much power they have a right to purchase, and highlighted their other contributions to local economies... Amazon said in filings that it pays fees as high as 75 percent of projected demand in some states but that Ohio's proposal to bill it 90 percent goes too far.
"Should the Ohio tariff be approved, Microsoft and Google both threatened in their testimony to leave Ohio." (Although at the same time, "pressure on the electric grid is mounting all over the country...")
And the article points out that on Thursday, "the White House announced measures intended to speed up data center construction for AI projects, including by accelerating permitting."
Energy customers must sometimes make a monthly payment to a utility that is a percentage of the maximum amount of electricity they predict that they could need. In Ohio, data center companies had agreed to pay 60 percent of the projected amount. But in May, the power company proposed a new, 10-year fee structure raising the charges to 90 percent of the expected load, even if they don't end up using that much. The major tech companies — all of whom are increasing spending on data center infrastructure to compete in AI — strenuously opposed the proposed contract in documents filed last month... According to testimony from AEP Ohio Vice President Lisa Kelso, there are 50 pending requests from data center customers seeking electric service at more than 90 sites, a potential 30,000 megawatts of additional load — enough to power more than 20 million households. That additional demand would more than triple the utility's previous peak load in 2023, she said. Between 2020 and 2024, the data center energy load in central Ohio increased sixfold, from 100 to 600 megawatts, her testimony reads. By 2030, that amount will reach 5,000 megawatts, according to the utility's signed agreements, she testified...
Meeting that demand will require AEP Ohio to build new transmission lines, an expensive and time-consuming process... Chief among the power company's concerns, according to the documents, is what will happen if it invests billions of dollars into new grid infrastructure only for the data centers to leave for greener pastures, or for the AI bubble to burst and the facilities to need much less power than initially projected. If the power company spends big on new infrastructure but the power demand it was built to serve doesn't materialize, other customers — including business and residential payers — will be stuck with the bill, the utility said... AEP Ohio's testimony in the case also questions whether data centers bring as much to local communities as factories or other high-energy-load businesses. Since 2019, non-data center businesses have created approximately 25 jobs for every megawatt of power requested, while data centers have created less than one job per megawatt, according to Kelso's testimony.
The tech companies rejected this criticism, saying the number of jobs they create is not relevant to how much power they have a right to purchase, and highlighted their other contributions to local economies... Amazon said in filings that it pays fees as high as 75 percent of projected demand in some states but that Ohio's proposal to bill it 90 percent goes too far.
"Should the Ohio tariff be approved, Microsoft and Google both threatened in their testimony to leave Ohio." (Although at the same time, "pressure on the electric grid is mounting all over the country...")
And the article points out that on Thursday, "the White House announced measures intended to speed up data center construction for AI projects, including by accelerating permitting."
Hmm.. (Score:1)
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You assume every household is charging their EV from flat to 90% every night.
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We don't have to assume anything. Smart meters can figure this out. And given an approved EV charging rate, recover it from those responsible.
We do this to oil companies and pipelines already (Score:2)
If you are a big part of the energy production, use, or transportation in this country, you will need to pay more for that energy infrastructure.
Forcing everyone else - socializing your company's costs - to pay for your company to make more profits is not a viable economic plan.
Industry knowledge (Score:3)
Having been in the electrical grid industry at one time, the utility companies have incredibly detailed inventories of every component in the grid.
The FERC (Federal Energy Regulatory Commission) routinely dictates that certain pieces of equipment be replaced well before their expected lifetime due to safety and other concerns.
The electrical utilities have good estimates of how much upgrades would cost, what order to do the grid upgrades, and how long it would take to do grid upgrades.
Consider, that each pub
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Would like to point out that a city level electric utility would have hundreds of thousands of grid parts in their distribution area.
And also that the FERC (fed government) routinely forces utilities to remove and replace known defective grid parts within X days of a federal notice.
These are mandatory orders, and if the energy company does not comply, they are subject to large per-day in non-compliance fine paid to the federal government.
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Re:Hmm.. (Score:5, Insightful)
Charging an EV at home is pretty insignificant compared to the data centers these companies run - especially AI datacenters. Home users pay for that extra electricity (unless you're stealing it from your neighbor or something). And it doesn't require the power company to put new infrastructure to your home.
These data centers require more infrastructure. If the power company builds it, and these companies pull out, the power company is out all that money for infrastructure that is no longer needed or used. And it gets passed along to the rest of the customers.
So, yeah, these companies absolutely should pay for 100% of the extra infrastructure and their expected energy uses upfront. They aren't important to the state's economy or bottom line. These companies are just all giant babies threatening to run away if they don't get their way. Let them run away.
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No, but if large numbers of people buy EVs and start charging them at home, eventually the local power company will have to start building more capacity to accommodate them and when that happens, the EV's owners should bear at least some of that cost.
Re: Hmm.. (Score:2)
Great but home users charging EV dont disappear after 5 years because they get a better deal elsewhere, so they will pay for any required network upgrades.
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That would still only require normal incremental upgrades. You'd have to swap something like over half the vehicles on the road to electric over a very short time. Like a few months. Those already paying the higher rates will still be the ones to mostly pay for the upgrades. It doesn't matter if it's because you have an EV or running a server farm.
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EVs charged at home are usally charged at night, which is way off-peak hours where demand is already very low.
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They don't use roof-mounted solar panels? That should work in summer, and there are far fewer air-conditioning units running in winter so the grid should have some spare capacity.
In theory, if those companies say their power needs are going to be more than double the current peaks, those companies should have to pay for the massive upgrades which are going to be necessary.
An alternative would be for them to build their own power stations next door, something which could only conceivably make sense if sever
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residential roof-mounted solar panels only helps to charge your car if your car is home...
Elseways you have to have not only the car, the panels but also a 60kWh battery bank that you'll dump into your car when you get home [but probably not until midnight].
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Not a required assumption. Merely that a large percentage will do so the day before Mother's Day or before Thanksgiving, as they all need to go over the river and through the woods to grandmother's house.
For better or for worse, capacity planning of networks such as this requires that you plan for peak usage. Yes, some demand shaping is doable, but the same night you have to charge your car you're also doing a load of laundry and baking the turkey or baked beans. AT&T [before the breakup, so actual AT
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So ... (Score:2, Insightful)
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the cost of all those upgrades doesn't get passed on to you and me who had nothing to do with it.
Who taught you this? In Murika, we bail out corporations all the time. You think they dont allow consumers to bail out utilities? HAHAHAHAHAHAHA
Charge the Cost (Score:2)
Re:30,000MW / 20M (Score:5, Informative)
The US Energy Information Administration [eia.gov] says "the average annual amount of electricity [for a] U.S. residential electric-utility customer was 10,791 kilowatt-hours (kWh), an average of about 899 kWh per month." That's ~30 KWh per day, equivalent to a constant power draw of ~1250 W, below what the utility based their statement on. So, they were being conservative.
Next time, you might want to know WTF you're talking about before complaining about the capabilities of "people like that."
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The key point is average. The oven is 5,000 watts all by itself, but it's not on all the time. The label on the oven states the maximum load is 11.2 kW. The water heater is 4500 watts, but it's not on all the time. At this particular time the only thing running is the refrigerator at about 200 watts and whatever a Mac mini draws in sleep mode.
For this year the lowest monthly average was 750 kWh in July, the highest was 2150 in January.
Average doesn't begin to describe what's really going on.
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There's always someone who doesn't understand the difference between energy and power!
Re:30,000MW / 20M (Score:5, Informative)
You might be surprised to find that the average household consumption is, in fact, around 1500W. 1500W (constant) for a year is about 13000kW-hr.
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How is that calculated, certainly doesn't include anyone who needs to heat or cool their home, 1500W continuously in most of the North will freeze you to death and cause heatstroke in the South. I'm assuming that takes a few values and takes them at face value, ignoring the fact that ~30-40% of US households is not connected to "residential" grids but rather to private, agricultural or industrial (very cheap) energy supplies that do not (have to) share data about energy consumption.
If you see meters on the
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That 30-40% number doesn't sound correct, at least for any area in which I've lived... every house and apartment has its own dedicated power meter and is billed individually by the power company. The only place I've ever lived that didn't bill individually was my college dorm. I'm curious where that claim originates, or for what geographic region.
The hottest months where I live are July and August; the average daily consumption on my bills from this summer were for 27.9 and 23.0 kW-hr per day for those tw
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Thats when they dont have a 1kw power supply hooked up to a very high end gaming PC they use 8hrs a day right? 1500W seems conservative if the household has less downtime than say people had 30yrs ago.
Should not be a federal issue (Score:4, Insightful)
In this specific case, I agree with the state -- to me it seems the risks of building energy systems for tech companies is inherently more risky than the risks of building out energy for say local houses/apartments. So the state needs to put on big boy pants, ask for higher rates and/or commitents and risk these tech companies leaving Ohio. Or risk screwing their residents.
BTW, imo, there is no way that the feds can do as good a job with infrastructure as state(s) or regional energy agreements. Sure, states are run by the same greedy, mypoic political folks as DC, but if you really want to get boondogles have the feds try to run something because they don't worry as much about risks. Closer to the problem (and the people paying for it) is better.
Re:Should not be a federal issue (Score:5, Informative)
Indeed this is not like general grid updates, where the average use is going up due to a large number of new houses or whatever, where each house is using a small portion of the total increase.
This is a very small number of customers each consuming huge portions of the new demand; this highly localized demand probably should be funded more directly by those demanding it, rather than spread around to every consumer on the grid.
Note that EV customers are "small" demand, and it is generally spread out over the grid, not concentrated, so the traditional pricing models work just fine there (to respond to a different poster above).
Re:Should not be a federal issue (Score:4, Informative)
Fast EV charging is a bit complicated; a 5MW demand for 6-10 parking spaces of real-estate isn't really what the grid planners had intended. It is about 50% of a 12-13.47kV or 20% of a 33-35kV circuit; most utilities try to plan distribution circuits with about 20% headroom for growth. Distribution is relatively easy to expand though.
At the substation level a single charging station isn't a big deal, but 2-3 can add up quickly; the substations usually have less headroom, and upgrading them gets significantly more expensive.
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Re:Should not be a federal issue (Score:4, Insightful)
In this specific case, I agree with the state -- to me it seems the risks of building energy systems for tech companies is inherently more risky than the risks of building out energy for say local houses/apartments. So the state needs to put on big boy pants, ask for higher rates and/or commitents and risk these tech companies leaving Ohio. Or risk screwing their residents.
BTW, imo, there is no way that the feds can do as good a job with infrastructure as state(s) or regional energy agreements. Sure, states are run by the same greedy, mypoic political folks as DC, but if you really want to get boondogles have the feds try to run something because they don't worry as much about risks. Closer to the problem (and the people paying for it) is better.
Exactly. Data Centers use huge amounts of electricity, want it o be uninterruptible and build where land is cheap but the infrastructure isn't there to support their requirements. As the TFA points out, absent, or vent with, significant investments by the data centers in the infrastructure the ratepayers and utilities will be left holding the bag if they shutdown or leave. It's not unreasonable they pay the costs of building out the infrastructure.
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It should be exclusively a PUC issue, although a federal guideline that local agencies can easily apply would save a lot of pain (and provide a shelter for the PUCs from lawsuits). The math on this stuff is very complicated. You need to weigh residential rates against job creation, as well as the incremental cost of demand, incremental cost of supply, redundancy and resiliency and timing.
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In this specific case, I agree with the state -- to me it seems the risks of building energy systems for tech companies is inherently more risky than the risks of building out energy for say local houses/apartments.
A bribe will change the State's attitude quite quickly. I am guessing the tech companies forgot about that part of it... or, they wanted to see if they could get their way for free first. Regardless, this is a non-issue. The tech companies will get their power and we will be fucked regarding maintenance.
Grid costs part of electricity price (Score:2)
Normally, grid costs are factored in as part of the electricity price. The utilities are selling lots of electricity, so they have LTS of money for the grid.
Unless they negotiated a bad deal with these companies, there shouldn't be a problem. If they did, well, that was dumb. Regardless, I don't see why the politicians should be involved.
Re:Grid costs part of electricity price (Score:4, Interesting)
In Québec, industrial users pay 1/2 to 1/3 what residential customers are paying (no, the heritage portion does not count). We sold all our surpluses at cost or below cost (since cost is rising) and now are stuck building more capacity and the residential customers are footing the bill. https://financialpost.com/comm... [financialpost.com]
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Some places, but not everywhere. Here there is a separate Service charge of 59 cents a day and energy charge is added to that. The Service charge for three phase is $1.12 a day.
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That's not quite how it works. Residential rates are usually very simplified, but when you become a larger consumer you pay separate components for reserved capacity, actual demand, and energy. The problem is your energy cost doesn't necessarily reflect the incremental cost of supply.
We got this all backwards (Score:3)
Experts [are] concerned that the U.S. power grid may not be capable of dealing with the combined needs of the green energy transition and the computing boom that artificial intelligence companies say is coming...
These corporations are just giant black holes when it comes to money, power, and resources. They just keep demanding more and more, but all I ever see is it disappear into a black abyss.
Fuck our corporate overlords. I vote for green energy transition. I hope others do too.
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To solve that problem, the government should require every EV to be equipped with energy storage! Wouldn't that be great? [slashdot.org]
Sometimes I surprise even myself with such great ideas that nobody else ever thought of.
The electric company is right (Score:5, Insightful)
They will pay (Score:1)
What are energy rates for? It's up to the energy company to be competent enough to find its own infrastructure.
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What are energy rates for? It's up to the energy company to be competent enough to find its own infrastructure.
They are capable of funding it, by charging the user the costs in the rate structure; which is what the data center don't like, they want the ratepayers to subsidize their infrastructure needs. It's probably in Ohio's long term interest they make good on their promise to leave if the PUC approves the plan; and as more states see the long term impact on prices for consumers and other businesses data centers may wind up paying their fair share everywhere.
Re:They will pay (Score:4, Insightful)
they want the ratepayers to subsidize their infrastructure needs
Data centers are ratepayers too. It's up to the states' PUCs to approve rate structures which fund system infrastructure expansion. Generally, these rates are based on the peak power demands of each customer (or class of customers in the case of smaller users like residential).
The primary problem is that much of this infrastructure work needs to be done up front to serve loads like data centers. And the recovery through billing works over longer periods of time. This puts utilities in the position of having to borrow a lot of money up front, increasing their interest expenses. Which is spread across all rate payers. So, you'll be seeing charges for this added to your residential bill. Utilities just want to place a bigger chunk of these expenses on the customers that are responsible for them. The data centers. Or have some other system of having the DCs assist in funding this work. The DC operators don't like this.
Welcome to the tragedy of the commons.
Re:They will pay (Score:4, Insightful)
they want the ratepayers to subsidize their infrastructure needs
Data centers are ratepayers too. It's up to the states' PUCs to approve rate structures which fund system infrastructure expansion. Generally, these rates are based on the peak power demands of each customer (or class of customers in the case of smaller users like residential).
For sure, and since data centers often want gigawatts of power and the lines to supply it, it's not unreasonable for them to cover the costs. The issue, as I see it, is they want the power but for the costs to be borne by the rest of the ratepayers. You want up to a GigWatt of uninterruptible power, here's teh costs for power and T&D.
The primary problem is that much of this infrastructure work needs to be done up front to serve loads like data centers. And the recovery through billing works over longer periods of time. This puts utilities in the position of having to borrow a lot of money up front, increasing their interest expenses. Which is spread across all rate payers. So, you'll be seeing charges for this added to your residential bill. Utilities just want to place a bigger chunk of these expenses on the customers that are responsible for them. The data centers. Or have some other system of having the DCs assist in funding this work. The DC operators don't like this.
Welcome to the tragedy of the commons.
Unfortunately, states have fallen for the "we'll bring in lots of jobs" BS for years and gave companies sweetheart deals and the data centers want the same love. If enough states said pay up or FO, they'd likely pay up rather than not build.
Re: They will pay (Score:4, Insightful)
It's more the data centres bugger off say 5 years which means everyone else is paying for those electricity upgrades because they factor in a much longer period for amortization of the upgrade.
Direct Link To Washington Post (Score:2)
In case anyone wants to read the article from the original source:
https://www.washingtonpost.com... [washingtonpost.com]
Of course they are going to fight for profits (Score:3)
"According to testimony from AEP Ohio Vice President Lisa Kelso, there are 50 pending requests from data center customers seeking electric service at more than 90 sites, a potential 30,000 megawatts of additional load — enough to power more than 20 million households."
If the board has that many big companies making requests, then rest assured that they have calculated the arbitrage and chosen this particular location and utility because they are hugely cheaper than anywhere else.
100 percent I hope the utility goes through with this. Send a message to these corporate fucks.
Socialism (Score:2)
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Not particularly versed in socialist policy, but I would surmise it would go to a state vote (like for a bond), with some automatic contract provisions (like companies putting 50% of the projected costs in escrow) should the companies leave the utilities high and dry.
Come to think of it, I haven't seen much of socialist thought/dialogue on the major factor of production- land.
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I'm curious what the answer to this would be in an ideal socialist society. Or is it just irrelevant because there is only one entity (everybody) who pays for everything?
Since socialism is essentially socialised ownership of means of production and/or distribution, socialized electric utilities already exist. They are called cooperatives. https://www.wrec.coop/co-op-10... [wrec.coop]
Santa Clara is a case study (Score:5, Informative)
The city of Santa Clara in the middle of Silicon Valley is a case study [svvoice.com] in how businesses, and particularly large businesses, are subsidized by households. Households only consume 5.7% [siliconvalleypower.com] of the city-owned utility's electricity. However, households not only pay a higher rate ($0.166/kWh household vs. $0.146/kWh commercial/industrial), for using more electricity, households pay a higher rate while businesses pay a lower rate. And not only that, there is a program where business can get a 12% discount [siliconvalleypower.com] simply for pleading hardship. And that's not all. The rates have been increasing every year. Why? Because expansion is needed, not for households, but to support businesses.
Should we care about proximity? (Score:3)
I assume that situation is to attract or keep business customers. If it increases the local tax base, and/or adds local jobs... I can see some logic there for the people making the decisions (guessing from outside the electric utility).
But with big 'compute boxes for the internet' I don't see those as true. And honestly businesses have tricks to shift 'profit' where they like, so maybe my thinking should be limited to physical on site jobs as the benefit.
If I was running data centers I'd try to automate
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On the other hand, Santa Clara's power costs less than half of what PG&E customers pay [pge.com] in the surrounding cities. They're doing something right, even if you disagree with subsidizing local businesses.
Sure, these starving giants need help! (Score:2)
More taxpayer money, so that they can make even more profits, that is. How repulsive.
Time for a car analogy (Score:2)
Hint: one puts a whole lot more wear and tear on the infrastructure then the other one does.
Observation: large scale industrial users of electricity always pay far less then individuals for energy.
Conclusion: the large scale industrial consumers are parasites on the backs of the vast majority of users.
Before you go whining about electricity being different the
Sounds like net neutrality (Score:2)