News
04/03/26
Big Tech to sign pledge to pay for AI buildout
Houston, 4 March (Argus) — Major tech companies gathered at the White House with
President Donald Trump Wednesday to sign a pledge intended to shield consumers
from higher electricity costs related to the development of power-hungry data
centers. Google, Microsoft, Meta, Oracle, xAI, OpenAI and Amazon were set to
sign the "Ratepower Protection Pledge," agreeing to "build, bring, or buy" new
generation resources and to cover all transmission and distribution upgrades
associated with their data center projects, the White House said Wednesday. The
pledge comes as public concern mounts over data center power consumption and its
affect on household electricity bills. US electricity prices have risen in
multiple states as data center construction has surged to support artificial
intelligence (AI), posing a political problem for candidates heading into the
November midterm elections. "President Trump's ratepayer protection pledge will
deliver more affordable, reliable, and secure energy for the American people and
help stop the rising electricity prices that started during the previous
administration," US Secretary of Energy Chris Wright said ahead of the meeting.
The nation's largest utilities are spending hundreds of billions of dollars to
add generation and upgrade existing infrastructure to meet what multiple
companies have described as unprecedented demand growth. Data center development
plans have led to double-digit growth in electricity bills in some markets in
the past two years, and government officials and company executives in the
technology and energy sectors are seeking ways to ensure households do not bear
the brunt of the cost. "Trump's desire to manage energy costs for households via
the Ratepayer Protection Plan will be challenging to effect as costs are layered
throughout the energy system," Ben Heininger, US data center energy lead at
Baringa, said in an email. New generation capacity may add supply to the system
but may still be constrained by transmission bottlenecks. Tech companies would
need to behave like vertically integrated utilities, which undertake such
projects in tandem to truly shield consumers from rate hikes, he said. Runaway
Capacity Prices Data center loads are responsible for an additional $23bn, or
40pc of total costs, in the last three capacity auctions at PJM, said Joseph
Bowring, president of Monitoring Analytics, the independent external market
monitor for PJM Interconnection. Prices skyrocketed into record-high triple
digits as larger reserve requirements driven by AI needs coincided with
coal-fired and nuclear plant retirements. These prices are locked in until 2028,
making it virtually impossible to lower consumer prices in the near term,
Bowring said. PJM's territory of 13 states includes the largest cluster of data
centers in the world in northern Virginia. "The White House ... recognizes
correctly that data centers have to be served by new generation because
otherwise you're cannibalizing the old generation, making it everyone else's
problem," Bowring said on a webcast hosted by the Brookings Institution. The
White House did not specify how the pledge signed by tech companies will be
implemented and tracked. It was unclear if the commitment extends to their
subsidiaries and special-purpose vehicles, which often sign contracts with
utilities, the environmental advocate Earthjustice said. "We urgently need
strong policies and protections to ensure that data centers pay their way,
disclose and mitigate their impacts, and are powered by clean energy,"
Earthjustice vice president of litigation for climate and energy Jill Trauber
said in a statement. Data center demand appears to be extending fossil-fuel
dependency in the interim. Some utilities have delayed coal-fired plant
retirements and are investing in natural gas generation as tech companies
express concerns about the intermittency of renewable power sources. By Jasmina
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