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> Here’s the problem for consumers: To meet data center demand, utilities are building new power plants and power lines that are needed only because of data cen

> Here’s the problem for consumers: To meet data center demand, utilities are building new power plants and power lines that are needed only because of data center growth. If state regulators allow utilities to follow the standard approach of splitting the costs of new infrastructure among all consumers, the public will end up paying to supply data centers with all that power. I don’t agree with the premise of this article. Of course they will “include these costs” for all ratepayers because the alternative would be Meta (or whoever) just buys all the electricity (or at least a much greater share). Of course ratepayers share in the cost of building new infra because the equilibrium price of electricity has gone up.

A4ET8a8uTh0_v2 1y ago
Speaking of.. aren't most of those public utilities?
- epistasis 1y ago
  Public utility Commissions are corrupt with shocking frequency, and Americans just shrug it off without reform. Arizona is notorious for this. It even reached into state legislatures, there was a massive Ohio bribery scandal not too long ago. But there's a lot more that never gets any attention, especially with the death of so much journalism.
XorNot 1y ago
Except little of that infrastructure is going to serve rate payers at all. The sort of high capacity data center connections being built aren't strengthening or improving the electricity supply for residential consumers - their lines aren't changing, in fact most of the transmission infrastructure is unlikely to be able to serve them at all.
- whimsicalism 1y ago
  most of the cost here is coming from generation, especially given that these plants are often being colocated with the data center and the companies themselves are oftentimes financing the transmission lines. i agree where possible, transmission costs (and associated liability) should be internalized to the particular consumer (also in residential fire-prone areas).
  - kesslern 1y ago
    This is not the case for AEP customers in Ohio. Our transmission costs have increased so much over the last few years that many are paying almost as much for transmission as generation (on $200+ bills). The Columbus Dispatch recently wrote about it after so many people posted their bills in the Columbus subreddit.
brightball 1y ago
I’m surprised that big data centers aren’t just locating in proximity to nuclear plants that can probably easily supply the extra power and reasonable rates.
- whimsicalism 1y ago
  i think that is a large part of what they are doing, although unfortunately so far most of the collocation has been gas turbines due to the shorter timelines
- maxerickson 1y ago
  Why would nuclear plants mostly be running below capacity?
  - jacquesm 1y ago
    Well, technically they always are, but the GP suggested that there was a lot of spare capacity and there really isn't. The WNA has a nice set of graphs about this, which show 80%+ utilization and that's not too far from the practical limit. https://world-nuclear.org/our-association/publications/world-nuclear-performance-report/global-nuclear-industry-performance https://world-nuclear.org/our-association/publications/world...
    - crote 1y ago
      It's a side effect of the economics of nuclear power. The cost of the nuclear fuel is more-or-less a rounding error. On the other hand, personnel has to be paid no matter at what load the reactor is operating, and paying back the construction loan is also a fixed monthly fee. This means running a nuclear reactor at 10% costs about the same as running it at 100%, so running it at anything but full capacity means you are losing out on potential income. Running it at 10% capacity means having to sell that electricity at 10x the usual rate! Combine this with the incredibly high risks involved in such a massive long-term investment, and most reactors operate on a "strike price" principle: they negotiate a fixed electricity rate with the government, and the government has to pay (or gets to keep) the difference between the market rate and the strike price. More importantly, this applies to all the electricity the reactor could sell: if the reactor is able to generate power but the grid operator for one reason or another wants to source it somewhere else, the reactor operator still gets paid. All this means nuclear reactors can only really be used to supply base load. In an ideal world we'd want to use them as peaker plants to make up for deficiencies left by solar and wind, but in practice we'll be turning off wind farms to let nuclear reactors run. Nuclear power might've made sense a couple of decades ago, but there just isn't a place for them left in a modern renewable-heavy grid.
alphazard 1y ago
If the utilities didn't get any subsidies from the government then it wouldn't be an issue. Electricity costs would increase as demand shifts out, the excess surplus for the power company would allow them to invest in more infrastructure. The big customers would contribute more to the new infra because they buy more electricity. However if utility companies do get subsidies to spend on infra, then it doesn't matter how much electricity a person buys, the money is coming from taxes separately from how much electricity anyone is buying. This would allow large consumers to take advantage of tax payers to build the infra to shift out the supply, which mostly benefits the large consumers. The TLDR is that this is a known drawback of utility monopolies and subsidies, and if you took those away it wouldn't matter how much electricity anyone was using, it would all sort itself out with prices.
- malfist 1y ago
  I'm not sure you can say a utility company prices are better set by the free market. Even outside government enforced monopolies, you can't exactly pick and choose a utility, or hook multiple up
  - alphazard 1y ago
    I specifically said that you needed to get rid of monopolies and subsidies for prices to work. Most places are not set up for that, and giving a power company a monopoly is a necessary evil. That's not a solution without a tradeoff though. When you have a monopoly, the consumers need to collectively negotiate prices. Part of that negotiation can lead to other forms of rent-seeking in the form of subsidies, or whatever else. It's just trading problems for problems. What might a better solution look like? Having municipalities own the last mile, and take ownership of the grid might eliminate the need for energy monopolies. Multiple energy suppliers could compete, and the grid would be maintained through contractors. The contractors hired to tend to the lines and conduits wouldn't be in the power business, they would be in the plumbing and wiring business. There is a state monopoly on the grid infrastructure, the same way there is a state monopoly on roads. There's no government truck or car monopoly even though that's what uses the roads.
sowbug 1y ago
*whoever who is for subjects, whom is for objects. The answer to your query is the subject that is buying the electricity.
- whimsicalism 1y ago
  you're downvoted but i appreciated the correction and edited the post
lesuorac 1y ago
Is that premise true? I thought most utilities weren't allowed to increase rates to fund new development and that's semi an issue for new nuclear plants because you can't add say 1 cent to everybody's bill to finance the loan until after it's been built. Which many people argue is a good thing considering America's inability to stick to a budget and inability to achieve economics of scale. Although even if it's false. Adding more demand without a corresponding increase in supply leads to a price increase and I'd suspect most residential power demand is inelastic (hence the issue for Griddy customers during Texas's winter storms) so you're going to feel it for a different reason.

A4ET8a8uTh0_v2 1y ago

Speaking of.. aren't most of those public utilities?

epistasis 1y ago
Public utility Commissions are corrupt with shocking frequency, and Americans just shrug it off without reform. Arizona is notorious for this. It even reached into state legislatures, there was a massive Ohio bribery scandal not too long ago. But there's a lot more that never gets any attention, especially with the death of so much journalism.

XorNot 1y ago

Except little of that infrastructure is going to serve rate payers at all. The sort of high capacity data center connections being built aren't strengthening or improving the electricity supply for residential consumers - their lines aren't changing, in fact most of the transmission infrastructure is unlikely to be able to serve them at all.

whimsicalism 1y ago
most of the cost here is coming from generation, especially given that these plants are often being colocated with the data center and the companies themselves are oftentimes financing the transmission lines. i agree where possible, transmission costs (and associated liability) should be internalized to the particular consumer (also in residential fire-prone areas).
- kesslern 1y ago
  This is not the case for AEP customers in Ohio. Our transmission costs have increased so much over the last few years that many are paying almost as much for transmission as generation (on $200+ bills). The Columbus Dispatch recently wrote about it after so many people posted their bills in the Columbus subreddit.

brightball 1y ago

I’m surprised that big data centers aren’t just locating in proximity to nuclear plants that can probably easily supply the extra power and reasonable rates.

whimsicalism 1y ago
i think that is a large part of what they are doing, although unfortunately so far most of the collocation has been gas turbines due to the shorter timelines
maxerickson 1y ago
Why would nuclear plants mostly be running below capacity?
- jacquesm 1y ago
  Well, technically they always are, but the GP suggested that there was a lot of spare capacity and there really isn't. The WNA has a nice set of graphs about this, which show 80%+ utilization and that's not too far from the practical limit. https://world-nuclear.org/our-association/publications/world-nuclear-performance-report/global-nuclear-industry-performance https://world-nuclear.org/our-association/publications/world...
  - crote 1y ago
    It's a side effect of the economics of nuclear power. The cost of the nuclear fuel is more-or-less a rounding error. On the other hand, personnel has to be paid no matter at what load the reactor is operating, and paying back the construction loan is also a fixed monthly fee. This means running a nuclear reactor at 10% costs about the same as running it at 100%, so running it at anything but full capacity means you are losing out on potential income. Running it at 10% capacity means having to sell that electricity at 10x the usual rate! Combine this with the incredibly high risks involved in such a massive long-term investment, and most reactors operate on a "strike price" principle: they negotiate a fixed electricity rate with the government, and the government has to pay (or gets to keep) the difference between the market rate and the strike price. More importantly, this applies to all the electricity the reactor could sell: if the reactor is able to generate power but the grid operator for one reason or another wants to source it somewhere else, the reactor operator still gets paid. All this means nuclear reactors can only really be used to supply base load. In an ideal world we'd want to use them as peaker plants to make up for deficiencies left by solar and wind, but in practice we'll be turning off wind farms to let nuclear reactors run. Nuclear power might've made sense a couple of decades ago, but there just isn't a place for them left in a modern renewable-heavy grid.

alphazard 1y ago

If the utilities didn't get any subsidies from the government then it wouldn't be an issue. Electricity costs would increase as demand shifts out, the excess surplus for the power company would allow them to invest in more infrastructure. The big customers would contribute more to the new infra because they buy more electricity. However if utility companies do get subsidies to spend on infra, then it doesn't matter how much electricity a person buys, the money is coming from taxes separately from how much electricity anyone is buying. This would allow large consumers to take advantage of tax payers to build the infra to shift out the supply, which mostly benefits the large consumers. The TLDR is that this is a known drawback of utility monopolies and subsidies, and if you took those away it wouldn't matter how much electricity anyone was using, it would all sort itself out with prices.

malfist 1y ago
I'm not sure you can say a utility company prices are better set by the free market. Even outside government enforced monopolies, you can't exactly pick and choose a utility, or hook multiple up
- alphazard 1y ago
  I specifically said that you needed to get rid of monopolies and subsidies for prices to work. Most places are not set up for that, and giving a power company a monopoly is a necessary evil. That's not a solution without a tradeoff though. When you have a monopoly, the consumers need to collectively negotiate prices. Part of that negotiation can lead to other forms of rent-seeking in the form of subsidies, or whatever else. It's just trading problems for problems. What might a better solution look like? Having municipalities own the last mile, and take ownership of the grid might eliminate the need for energy monopolies. Multiple energy suppliers could compete, and the grid would be maintained through contractors. The contractors hired to tend to the lines and conduits wouldn't be in the power business, they would be in the plumbing and wiring business. There is a state monopoly on the grid infrastructure, the same way there is a state monopoly on roads. There's no government truck or car monopoly even though that's what uses the roads.

sowbug 1y ago

*whoever who is for subjects, whom is for objects. The answer to your query is the subject that is buying the electricity.

whimsicalism 1y ago
you're downvoted but i appreciated the correction and edited the post

lesuorac 1y ago

Is that premise true? I thought most utilities weren't allowed to increase rates to fund new development and that's semi an issue for new nuclear plants because you can't add say 1 cent to everybody's bill to finance the loan until after it's been built. Which many people argue is a good thing considering America's inability to stick to a budget and inability to achieve economics of scale. Although even if it's false. Adding more demand without a corresponding increase in supply leads to a price increase and I'd suspect most residential power demand is inelastic (hence the issue for Griddy customers during Texas's winter storms) so you're going to feel it for a different reason.