Georgia Regulators Approve Huge Electric Generation Increase for Data Centers

Summary:

Electric bills have emerged as a potent political issue in Georgia and nationwide, with grassroots opposition to data centers partly based on fears that other customers will subsidize power demands of technology behemoths.

Georgia's only private electric utility plans to increase power capacity by 50% after state regulators on Friday agreed 5-0 that the plan is needed to meet projected demand from data centers.

It would be one of the biggest build-outs in the U.S. to meet the insatiable electricity demand from developers of artificial intelligence. The construction cost would be $16.3 billion, but staff members say customers will pay $50 billion to $60 billion over coming decades, including interest costs and guaranteed profit for the monopoly utility.

Georgia Power Co. and the Public Service Commission pledge large users will more than pay for their costs, and that spreading fixed costs over more customers, could help significantly cut residents' power bills beginning in 2029.

“Large energy users are paying more so families and small businesses can pay less, and that’s a great result for Georgians,” Georgia Power CEO Kim Greene said in a statement after the vote.

But opponents say the five elected Republicans on the commission are greenlighting a risky bet by the utility to chase data center customers with existing ratepayers left holding the bag if demand doesn't materialize.

“The need for 10,000 megawatts of new capacity resources on the system in the next six years isn’t here," said Bob Sherrier, a lawyer representing some opponents. “It just isn't, and it may never be.”

The approval came less than two months after voters rebuked GOP leadership, ousting two incumbent Republicans on the commission in favor of Democrats by overwhelming margins. Those two Democrats won in campaigns that centered on six Georgia Power rate increases commissioners have allowed in recent years, even though the company agreed to a three-year rate freeze in July.

Peter Hubbard and Alicia Johnson — the Democrats who will take office Jan. 1 — opposed Friday's vote. But current commissioners refused to delay.

Georgia Power is the largest unit of Atlanta-based Southern Co. It says it needs 10,000 megawatts of new capacity — enough to power 4 million Georgia homes — with 80% of that flowing to data centers. The company has 2.7 million customers today, including homes, businesses and industries.

Whether the company’s projections of a huge increase in demand will pan out has been the central argument. Georgia Power and commission staff agreed Dec. 9 to allow the company to build or acquire all the desired capacity, despite staff earlier saying the company's forecast included too much speculative construction.

In return, the company agreed that after the current rate freeze ends in 2028, it would use revenue from new customers to place “downward pressure” on rates through 2031. That would amount to at least $8.50 a month, or $102 a year, for a typical residential customer. That customer currently pays more than $175 a month, including taxes.

"So we’re taking advantage of the upsides from this additional revenue, but allow it to shift the downside and the risk over to the company. And I’m real proud of that," Commission Chairman Jason Shaw said after the vote.

But “downward pressure” doesn't guarantee a rate decrease.

"It doesn’t mean your bills are going down," said Liz Coyle, executive director of consumer group Georgia Watch. “It means that maybe they’re not going up as fast.”

Existing customers would pay for part of the construction program that doesn't serve data centers. More importantly, opponents fear Georgia Power's pledge of rate relief can't be enforced, or won't hold up over the 40-plus years needed to pay off new natural-gas fired power plants.

In a Monday news conference, Hubbard likened it to a mortgage “to build a massive addition to your home for a new roommate, big tech.”

"If in 10 years, the AI bubble bursts or the data centers move to a cheaper state, then the roommate moves out, but the mortgage doesn’t go away,” he said.

Staff members say the commission must watch demand closely and that if data centers don't use as much power as projected, Georgia Power must drop agreements to purchase wholesale power, close its least efficient generating plants and seek additional customers.

Many opponents oppose any new generation fueled by natural gas, warning carbon emissions will worsen climate change. Some opponents were escorted out of the commission meeting by police after they began chanting “Nay! Nay! Nay! The people say nay!”

“Increased natural gas output for the sake of these silicon billionaire kings seems like a lose-lose," opponent Zak Norton told commissioners Friday.

Source: AP

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