A proposal for a data center near the Beltline was just tabled by the Atlanta City Council, but data centers continue to sprout up all around town. This is a trend that could have a major negative impact on small electric consumers, especially Georgia Power customers, and the reliability of the statewide electric network.
New data center construction will dramatically increase demand for electricity, with new individual projects requiring 300 megawatts or greater of electric power. That’s an enormous load for a single customer and a tremendous burden on existing electric generation resources.
Credit: Handout
Credit: Handout
Georgia Power is planning to serve these large-load customers with 3,600 MWs of new generation that will cost billions of dollars to build. In its most recent integrated resource plan, Georgia Power requested and was granted permission by the Public Service Commission to build three new natural gas combustion turbines to help meet the massive electric generation required to serve new data centers.
Data centers have two critical demands: abundant electric power on redundant circuits and access to major interstate fiber-optic networks. Both are found in the metropolitan Atlanta area. Data center developers will come here without tax incentives or discounted electric power because there are few other viable locations for siting data centers in the United States.
Being a major data center hub doesn’t provide any direct or indirect benefits to Atlanta or Georgia residents.
Data centers do not provide numerous high-paying jobs. Instead, they create minimal technical service positions to maintain the thousands of servers in a data center.
Being inundated with data centers doesn’t mean internet customers will see any noticeable improvement in service, unless reducing your search time by 1/10,000th of a second is critical to you or your business.
A high concentration of large data centers jeopardizes the overall reliability and efficiency of the entire Georgia electric network because of the demand placed on electric generation and transmission resources. This enormous electrical demand also will adversely affect new manufacturing projects coming to Georgia because they will compete with data centers to get available electric generation to serve their respective projects.
As large-load customers served by Georgia Power, data centers are likely to get 80% to 90% of their electric power demand under marginal rate tariffs. Marginal tariffs are different from standard base tariffs because capital costs are not included in marginal tariffs, but base tariffs include capital cost recovery. Residential and small commercial customers get their electric service on base tariffs.
Getting electric service on a marginal rate is an enormous cost savings for large-load customers and shifts capital cost recovery for generation onto residential and small commercial customers. Instead of paying approximately 18 cents per kilowatt-hour like an average residential customer, large-load customers on marginal tariffs pay approximately 3 to 5 cents per kilowatt-hour.
Over the past year, Georgia Power’s residential and small commercial customers have seen electric rate increases of more than 30%, the greatest increase in Georgia history. What Georgia Power doesn’t tell its customers is that the construction of 3,600 MWs or more of new generation to serve data centers will not be paid by the data centers if they are served by marginal rate tariffs.
Georgia will see no real benefits by building more data centers. Continued construction of new data centers will jeopardize the reliability of electric service, dramatically increase ratepayer exposure to more rate increases and drive away job-creating manufacturing projects competing for a share of the available electric load.
New data center development should not be stopped by government regulation, but they also should not be subsidized by tax incentives or discounted electrical rates. Data center developers should be responsible for the new generation costs they are creating and not shift this financial burden onto other customers, including small businesses and residents.
When Georgians are struggling with record-high electric bills and disconnection levels, now is not the time to exacerbate the problem by creating more upward pressure on rates by building new generation and infrastructure to serve speculative data center projects.
Robert Baker was a served on the Georgia Public Service Commission for 18 years and has been practicing in utility regulation for 34 years.
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