Users of data centers and other power-intense real estate will pay more for electricity in Georgia after a state agency this month approved rate hikes, a sign that local and state governments nationwide are focusing on the increasing strain being placed on power supplies.
The changes come through new measures approved by the Georgia Public Service Commission. One policy allows utilities to charge higher rates to industrial customers whose power usage exceeds a certain threshold, a group that includes data centers and other industries. The agency also said data center users will pay for additional power generation and transmission costs related to new construction projects.
The changes go into effect immediately and apply to new customers using more than 100 megawatts of energy, or the equivalent of powering tens of thousands of homes.
Utility companies say they’re struggling to meet the enormous demand for electric power from data center owners. The rise of artificial intelligence has exacerbated the issue as computer servers that process AI applications require even more power than standard applications. Meanwhile, nuclear power has experienced a rebound as Microsoft, Google, Amazon and other tech giants look for new sources of electricity for their data centers.
Georgia has at least 50 major data centers with more on the way, according to the state’s Department of Economic Development. Metro Atlanta was the seventh-largest U.S. data center market as of June 30, according to CBRE. Amazon Web Services said this month it plans to spend $11 billion over an undisclosed period to expand its infrastructure in Georgia to support cloud computing and AI.
Georgia’s rate hikes protect "residential and small business customers from data center load financial impacts,” Tim Echols, vice chairman of the Georgia Public Service Commission, said in a news release. “Data centers will need to bear the cost of their electricity acquisition.”
Other big users
Data centers aren’t the only group that's causing the rapid increase in power demand, said Dan Diorio, senior director of state policy at Data Center Coalition, a trade association for data center owners, developers and customers. Electric vehicles, new semiconductor manufacturing plants and the electrification of buildings are all contributing to the need for more power.
“Data centers are absolutely committed to paying their full cost of services,” Diorio told CoStar News. “We don’t want residential ratepayers subsidizing data centers.”
Georgia Power, the largest electric-power utility in the state, said in a statement that rate hikes approved this month by the Georgia Public Service Commission “are part of the constructive regulatory environment … which protects customers and helps ensure that growth benefits all customers as we plan and meet the needs of new large-load customers.”
Other states are also pursuing ways to require the largest power customers, including data centers, to “make financial commitments as a condition for receiving electric service,” Benjamin Levitt, an analyst with S&P Global Commodity Insights, told CoStar News.
Indiana Michigan Power, an electric utility that serves parts of both states, last year reached an agreement that requires Amazon, Google, Microsoft and other data center owners to compensate for their heavy electricity demand with funds to help offset costs for low-income residential customers, according to a news release.
Amazon Web Services plans to develop an $11 billion data center campus near New Carlisle, Indiana, and Google recently started construction on a $2 billion data center campus in Fort Wayne, Indiana.