Full title: After severe 76% electricity price hikes due to AI data centers, Virginia requires firms to pay for all dedicated upstream electrical infrastructure — State regulators crack down, governor says move will save civilians ‘hundreds of millions of dollars’
I dont understand you america, on many things. We do lots of things wrong here, but our power bill is based on usage. If you only use this much, this is your rate and the more you use the higher your rate goes. I sometimes make it to stage 4 power use and thats expensive but it doesnt effect me if I don’t go into that stage.
Higher users pay more without affecting smaller users in other words.
Utilities should, of course, be priced at the cost to generate, maintain, and distribute the resource. But this is America, home of rampant capitalism. Thus, profit is king. That means utility prices depend on supply and demand.
Data centers use so much power that it creates a resource scarcity. So the utility company raises the price per unit that electricity is sold for in those markets.
Everyone’s bill goes up when data centers are allowed in and shareholder profits skyrocket. Since the shareholders are happy, the powers that be are usually unwilling to address the problem as it is only the peons suffering.
It’s actuality a little surprising that the government is trying to address the problem in this case.
Because we’re owned by corporations. The datacenter company says “give us a tax break and discount on utilities and we will build a datacenter in your town, which will create x hundred jobs”.
So they do. And a few dozen tradespeople will be contracted to build it, then when it’s done they’ll leave again. A few people stay behind to run the thing, but mostly, datacenters are hands-off lights-out operations.
Somewhere in there, the politicians get a kickback. Probably their cousin owns one of the contracted companies.
At the residential level that can exist too in the USA, but its not nearly that simple here in the USA, and I doubt its entirely that simple in your country either. Electricity isn’t like a tank of fuel that is drawn down and refilled. Besides maintaining the infrastructure for generation and delivery, electrical capacity at any given moment has to be built into the system, not just pure total consumption over time. So simply paying for electricity consumed doesn’t capture all of those costs in the system to make that electricity consumption possible to the consumer.
Commercial/Industrial customers in the USA don’t just pay for “amount consumed” but also “demand charges” which means “at any given point how much electricity will you be pulling from the grid?”. Its not uncommon that the demand charges for businesses can be larger than the charges for amount of electricity consumed. Additionally, some European governments give large breaks in electricity rates to incentivize certain industries. Germany for example gives 50% discounts on electricity for chemical production, glass producers, or semiconductor producers if those companies invest in decarbonization efforts.
Many European commercial/industrial electricity consumers have variations on what I described above in addition to wholesale electricity purchases for a given period which also breaks away from your described “pay for what you use with higher rates for more consumption”.
Can I ask you what country you’re in (or another country that you know uses your country’s same system)?
Just to expand on this, most people and corporations don’t just pay for usage, they also pay a fee for the max amperage they have connected to the grid. I’m sure it’s actually the same in the USA, it’s just that they’re bending over backwards to bend the rules for data centers due to mass psychosis and rampant corruption.