It may be almost impossible to make data centers pay their 'fair share' of electricity costs [View all]

It may be almost impossible to make data centers pay their ‘fair share’ of electricity costs
Published: July 6, 2026 8:10am EDT

Theodore J. Kury
Director of Energy Studies, University of Florida


(The Conversation) Many major tech companies have pledged to pay their fair share of the costs associated with generating and transmitting more electricity to serve large data centers. But ratepayers across the United States are worried about the potential costs they might have to bear. That’s because it’s not immediately clear how the cost of data centers’ energy will be calculated. The effects of price increases are likely just beginning, and their full effects may not be felt for years.

For example, a recent report by the organization that monitors the PJM market, an area that encompasses all or part of 14 mid-Atlantic and Midwest states, concluded that expected power demand from data centers was a primary reason for US$23 billion in customer price increases that will last until at least the end of 2028.

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The complexity of setting prices

Setting a price for electricity is straightforward in principle but complicated in execution. Regulators identify the costs to provide service, allocate the costs to customers and design prices to recover those costs.

First, regulators identify the costs that a utility company incurs to provide service. Regulators look at the value of the assets the utility company invests in, such as power plants, transmission lines and substations, as well as its day-to-day operating expenses, such as salaries, fuel, replacement parts and electricity it purchases from other sources. Then these costs are allocated to categories of customers, such as residential, commercial and industrial.

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Citizens left holding the bag

There are other risks for residential customers, too. Utilities’ investments in electricity infrastructure last for many years. But not every proposed data center will get built, and some may use less energy than originally projected. Technology may even change, making some data centers obsolete after a year or two of operations. .....................(more)

https://theconversation.com/it-may-be-almost-impossible-to-make-data-centers-pay-their-fair-share-of-electricity-costs-283946