HARRISBURG, Pa. – Forecasts of electricity demand are raising alarms as utilities predict they will need two to three times more power within a few years to support a rapid influx of new data centers fueling a burgeoning artificial intelligence economy.
Lawmakers and regulators are questioning the reliability of these forecasts, concerned that projections may be based on speculative data center projects that may never come to fruition. This uncertainty poses a risk that consumers could be forced to shoulder the financial burden of building excessive infrastructure that is not needed.
Consumer advocates highlight that ratepayers in areas such as the mid-Atlantic electricity grid are already financing the cost of energy supply for both operational and planned data centers, often without knowing whether all projects will proceed as anticipated.
“There’s speculation in there,” warns Joe Bowring, head of the independent market watchdog Monitoring Analytics. “Nobody has been looking carefully enough at the forecast to know what’s speculative, what’s double-counting, what’s real, what’s not.”
Concerns Over Surging Demand
A lack of standardized practices to assess the viability of large-scale developments among utilities exacerbates the situation. According to industry analysts, developers may seek grid connections without concrete plans or financing for their projects, leading to inflated energy forecasts.
The Federal Energy Regulatory Commission and state authorities are pushing for better oversight and practices to ensure the reliability of electricity demand estimates, fostering better decision-making that would aid in infrastructure development.
Additionally, feedback from industry groups like the Data Center Coalition underscores the urgency of advancing transparency and accuracy in forecasting, which they argue is crucial to managing the escalating energy demands linked to AI growth.
Impacts on Ratepayers
PPL Electric Utilities projects data centers will triple its peak demand by 2030, leading to increased costs for consumers. As electricity prices surge, state lawmakers are advocating for improved regulatory oversight to protect consumers from escalating utility costs driven by speculative energy demands.
Rep. Danilo Burgos has proposed legislation aimed at strengthening the authority of utility regulators, asserting the need for enhanced consumer protection in the face of rising energy prices already attributed to data center demands.
With state officials and energy regulators increasingly scrutinizing these forecasts, the key challenge remains ensuring balanced accountability and solidifying consumer protections in an industry undergoing rapid transformation due to AI advancements.
