The Data Center Price Myth

[Kamaji]

The Data Center Price Myth

Rising electricity prices are being pinned on data centers, but demand isn’t what makes power expensive.

Marc Oestreich | 12.23.2025

A simple story has taken hold in American politics: Big Tech is consuming vast amounts of electricity to power artificial intelligence, and ordinary households are paying the price.

It's a tidy narrative with a villain, a victim, and a moral. It also happens to be wrong.

The Conclusion Came First

In Washington, in statehouses, and increasingly in town halls, data-center projects are being stalled or blocked by communities convinced they're about to be priced out of their own electricity. Fear is outrunning evidence. Demand is cast as the problem and technology as the threat. Energy abundance is presented as something to fear rather than build.

That belief now has institutional backing.

Sen. Elizabeth Warren (D–Mass.) has opened a Senate investigation into whether AI data centers are driving up Americans' electricity bills—but the verdict is already baked in. In letters sent to utilities and hyperscalers, Warren and other Senate Democrats allege that rapid growth in data-center demand is forcing costly grid upgrades and shifting those costs onto households. One utility, Indiana Michigan Power, estimates it will spend $17 billion to meet projected data-center demand—costs Warren suggests will land on ratepayers.

*  *  *

Mistaking Use for Shortage

Blaming data centers for rising electricity prices is like blaming FedEx for the cost of gasoline. Demand didn't fail. Supply was boxed in.

Electricity is a capital-heavy business. Most of what consumers pay for isn't the power itself, but the infrastructure that produces and delivers it: generation, transmission, substations, and distribution. Once that infrastructure exists, the marginal cost of serving additional load is relatively low. What makes electricity expensive isn't use. It's underuse.

For this reason, steady demand has historically driven prices down, not up. When more electricity flows across the same wires, fixed costs are spread over more kilowatt-hours. Utilities recover investments more efficiently, and per-unit costs fall.

*  *  *

Source:  https://reason.com/2025/12/23/the-data-center-price-myth/

[Atruepatriot]

So what is your position? Myth or not?

[berdie]

All I can say is that I read there may be more shortages if we have a really cold spell this year. Blamed on data centers.

[Smokin Joe]

All I can say is that I read there may be more shortages if we have a really cold spell this year. Blamed on data centers.

Look at it this way. Most of what I read howls about greedy "Big Oil" charging too much for gasoline and crude oil. But for those in the know, oil prices (crude oil, and even gasoline) are set by bid in the trading pits at commodity exchanges, not by the oil companies. The press have ever given me cause to doubt their veracity.

[Free Vulcan]

Maybe where he lives, but here your electric bill is part demand and part infrastructure.

In fact if you spike and go above the peak usage allotted to you, you will pay a demand charge.

Here at least in Iowa you least have to go to the Utilities Board to get rates raised, but the IUB like many is just a rubber stamp.

[Weird Tolkienish Figure]

The Data Center Price Myth

Rising electricity prices are being pinned on data centers, but demand isn’t what makes power expensive.

Marc Oestreich | 12.23.2025

A simple story has taken hold in American politics: Big Tech is consuming vast amounts of electricity to power artificial intelligence, and ordinary households are paying the price.

It's a tidy narrative with a villain, a victim, and a moral. It also happens to be wrong.

The Conclusion Came First

In Washington, in statehouses, and increasingly in town halls, data-center projects are being stalled or blocked by communities convinced they're about to be priced out of their own electricity. Fear is outrunning evidence. Demand is cast as the problem and technology as the threat. Energy abundance is presented as something to fear rather than build.

That belief now has institutional backing.

Sen. Elizabeth Warren (D–Mass.) has opened a Senate investigation into whether AI data centers are driving up Americans' electricity bills—but the verdict is already baked in. In letters sent to utilities and hyperscalers, Warren and other Senate Democrats allege that rapid growth in data-center demand is forcing costly grid upgrades and shifting those costs onto households. One utility, Indiana Michigan Power, estimates it will spend $17 billion to meet projected data-center demand—costs Warren suggests will land on ratepayers.

*  *  *

Mistaking Use for Shortage

Blaming data centers for rising electricity prices is like blaming FedEx for the cost of gasoline. Demand didn't fail. Supply was boxed in.

Electricity is a capital-heavy business. Most of what consumers pay for isn't the power itself, but the infrastructure that produces and delivers it: generation, transmission, substations, and distribution. Once that infrastructure exists, the marginal cost of serving additional load is relatively low. What makes electricity expensive isn't use. It's underuse.

For this reason, steady demand has historically driven prices down, not up. When more electricity flows across the same wires, fixed costs are spread over more kilowatt-hours. Utilities recover investments more efficiently, and per-unit costs fall.

*  *  *

Source:  https://reason.com/2025/12/23/the-data-center-price-myth/

In a perfect market, our electricity prices would inch towards zero at all times. If demand rose, supplies would open new plants to keep up with demand, with the idea that more plants = more money. But we live in the real world: Environmentalists and Nimby's don't like plants. Hence you have the problems we're having. It's definitely not Trump IMO, but he'll get some of the blame.

People are idiots is what it comes down to. Nimby's, boomers, idiots. The trifecta.

[Hoodat]

Sen. Elizabeth Warren (D–Mass.) has opened a Senate investigation into whether AI data centers are driving up Americans' electricity bills—

Nowhere near as much as do Democrat regulations.