What the utilities and tech industries keep getting wrong about data centers

Data Centers vs. the Public 

Nearly every week, an article comes across my news feed about a community’s pushback on a proposed data center. In fact, a recent study puts the opposition into numbers: 16 data centers worth a combined $64 billion have been blocked or delayed. I’m also starting to see more and more articles about outrage over high utility bills — and how that is being used as a political “win theme.” Here are a few examples: 

• Fortune 
• New York Times 
• Washington Post 

The two issues are linked, of course. Building additional electricity generation, transmission and distribution infrastructure to satisfy the power needs of data centers to fuel AI is a key driver for increased utility bills. The costs of the buildout have to get covered somehow, so they get passed on to everyday users of electricity like you and me, the folks the utility industry affectionately calls “ratepayers.” The interesting thing is that, in this country, utility rates are regulated in each state by Public Utility Commissions. So a utility can’t just decide to build a new power plant and pass along the costs to its customers in a vacuum; they have to submit detailed plans and a “rate case” to the commission to get approval. As this article points out, nine states will hold utility commission elections next fall. 

So the utilities and tech companies that want to keep the AI boom going will be dependent on utility commissioners approving their plans. And those utility commissions will be swayed by public sentiment about data centers and monthly power bills. 

The Messaging Gap 

Most of the messaging I see coming from the tech and utility companies on this issue are focused on the overall need. They generally go something like this: “AI is the future, and the U.S. needs to be the leader, not China,” or “Everyone benefits from AI — we’re now all using it every day — so we need the data centers to continue to supply the wonders of this great technology!” 

But those messages fail a Comms 101 tenet: You have to tell people what’s in it for them. It may seem like the messages above communicate a benefit to the folks bearing the cost increases, but they don’t. At ERM Shelton, we’ve worked in the utility sector for 25 years, and we’ve never seen utilities “get credit” for keeping the lights on. It’s a baseline expectation. The same goes for AI — we all expect to continue to have immediate access to it and usage of it, but we don’t want to pay the cost of it. 

We have often heard complaints from consumers about the price premium for “green” products or recycled content. A common refrain is, “I’m just an average person, struggling to get by. Why are companies putting the cost of doing the right thing on me? The companies should just eat the cost. Have you seen what they pay their executives?” 

This is the same issue. People expect to have access to the wonders of AI, but they absolutely don’t expect to shoulder the burden of the cost, especially given that tech companies are led by the richest men in the known universe who seem to have plenty of money to bear the cost. 

That issue won’t go away, no matter how good the messaging is about competing with China economically.  

Opposition into Opportunity 

There is a terrific opportunity here for the tech industry and utility industry to come together and actually create “what’s in it for the customer.”  

Imagine if every new data center or utility infrastructure project came with an adjacent project to make homes and buildings more energy efficient and, thus, more comfortable. Imagine if the messaging was, essentially, “new data centers in our community = more comfortable homes for everyone!” An awful lot of money is being thrown around in the AI arms race, and a lot more money will get spent to overcome community opposition to these projects. If tech companies spent some of that money to the direct benefit of average folks and told that story, everyone would get closer to what they want.