Senators probe AI tech giants over electric bills; Amazon says its data centers pay more than their share

Three U.S. senators have launched an investigation into whether tech giants, driven by soaring AI energy demands, are raising residential power bills. Separately, Amazon released a white paper Tuesday stating that its data centers are not the problem, and that in some regions it actually pays more than required for energy use.

The Democratic senators sent letters to Amazon, Microsoft, Google, Meta and three data center firms, according to the New York Times. The lawmakers raised concerns that energy demand driven by artificial intelligence was forcing utilities to deploy new power plants and upgrade the grid — with local ratepayers helping foot the bill.

“We write in light of alarming reports that tech companies are passing on the costs of building and operating their data centers to ordinary Americans as A.I. data centers’ energy usage has caused residential electricity bills to skyrocket in nearby communities,” the senators said, according to the Times.

Elizabeth Warren of Massachusetts, Chris Van Hollen of Maryland and Richard Blumenthal of Connecticut issued the letters.

Amazon offered a much different take in an analysis that examined the potential benefits, costs and risks that large energy loads created by data centers have on electric utilities.

The Amazon-funded study found that in some locations, the power bills currently being paid by the company more than cover the utility impacts. A typical 100 megawatt data center was estimated to pay an additional $3.4 million beyond the costs associated with its electricity use, which also include a utility’s infrastructure upgrades, deployment of new energy generation, operations and maintenance.

Utilities can use that surplus “to reduce rates for other ratepayers, but how this potential benefit is realized will differ across jurisdictions,” the study stated.

The assessment examined Amazon data center campuses in Oregon, California and Mississippi and was performed by E3, an independent economic consulting firm.

The white paper said the benefit to the utilities and other customers should continue into 2030, but noted that utilities will need to adjust their rates in the future to ensure that ratepayers are not subsidizing tech operations.

“To continue to prevent cross-subsidization, utilities must keep pace and leverage the full range of tools available to them to mitigate these risks…” the document states.

The rapid growth of the sector is central to the debate. A Department of Energy report projected that data center energy use, which was more than 4% of U.S. electricity consumption in 2023, could triple by 2028. This forecast is fueled by tech giants’ expanding investment: Microsoft and Amazon each reported nearly $35 billion in capital expenditures in the third quarter, much of it on data center infrastructure.

The tech giants are also investing globally in new wind and solar power and energy storage, while pursuing more costly power sources including nuclear.

In October, a group of U.S. representatives raised similar concerns to the senators’, asking the Federal Energy Regulatory Commission, Edison Electric Institute and the Data Center Coalition for information regarding data center impacts on residential power bills “to help ensure everyday Americans and small businesses aren’t bearing the brunt of data center energy costs.”

Washington representatives Kim Schrier and Adam Smith as well as Oregon Rep. Andrea Salinas were among the 20 lawmakers who made the request.

The investigations come amid a general rise in household expenses, making the allocation of utility costs particularly contentious. Residential electricity costs nationwide are on the rise, according to federal data. Power bills rose more than 7% on average when comparing September rates to a year earlier.

But the causes of the increase are complicated. A study this month in a peer-reviewed journal concluded that multiple factors impact electricity prices, including inflation, fluctuating gas prices and natural disasters such as hurricanes, storms and wildfires.