Volts Who is paying for all that data center power?
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Mar 12, 2025 
Eliza Martin, a legal fellow at Harvard, and Ari Peskoe, head of the Electricity Law Initiative, delve into the alarming rise in electricity consumption by data centers. They reveal how ordinary consumers might be footing the bill for Big Tech’s energy demands. A discussion unfolds about the cozy relationship between utilities and tech giants that risks undermining necessary reforms. The complexity of utility pricing, the potential of energy parks, and the urgent need for fair regulations add depth to their insightful analysis.
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Cost Causation Principle
- Utilities use "cost causation" to set rates, aiming to align prices with service costs.
- However, allocating costs like new power plants among customer classes is subjective, leading to disputes.
Ratepayer Competition and Uncertainty
- Utilities divide approved revenue among ratepayer classes, leading to competition for lower rates.
- This process involves uncertainty due to subjective cost allocation and potential utility misrepresentation.
Special Contracts and Political Pressure
- Special contracts allow utilities to deviate from standard rates for specific customers, often due to political pressure for economic development.
- These contracts face minimal scrutiny, potentially shifting costs to other ratepayers.