The data center construction boom is facing intense scrutiny from U.S. policymakers, as its strain on the power grid and direct impact on consumer electricity prices have become increasingly contentious political and economic issues.
On November 10, reports indicated that a group of left-leaning senators, led by Senator Bernie Sanders, sent a letter to the White House and Commerce Secretary Gina Raimondo, demanding an explanation of how the U.S. government plans to address rising electricity costs exacerbated by data center expansion.
They pointed out that tech giants like Meta, OpenAI, and Alphabet are driving a historic infrastructure push across the nation, with their massive power demands placing financial pressure on ordinary households. The letter criticized the previous administration's fast-track approval policies, arguing they forced Americans to "compete with trillion-dollar corporations just to keep their lights on."
According to the U.S. Labor Department, residential electricity prices rose 5.1% year-over-year in September, contributing to inflation exceeding the Federal Reserve's target. While AI development has injected momentum into the U.S. economy and capital markets, its substantial energy consumption and costs are sparking widespread concern—from local communities to federal lawmakers—and may pose new regulatory risks to tech companies' expansion plans and related investments.
Senators Call for Federal Intervention to Ensure Tech Giants Bear Costs
The letter's core demand is for federal oversight to ensure the enormous costs of data center construction are borne by the large tech companies driving them, rather than passed on to consumers. Besides Sanders, signatories included Democratic Senators Chris Van Hollen (Maryland), Ed Markey (Massachusetts), and Ron Wyden (Oregon). Notably, Wyden's home state of Oregon is one of the largest data center markets in the U.S.
Connecticut Senator Richard Blumenthal emphasized, "The goal isn’t to stop data centers but to ensure the costs are covered by the mega-companies creating them, while controlling or even reducing electricity prices." He expressed concern that power regulators and local officials might "succumb to the immense financial pressure these companies wield." The lawmakers urged the establishment of "federal safeguards and oversight mechanisms" to address the challenge.
Rising Electricity Prices Fuel Inflation, Emerge as Political Issue
The previous administration had pledged to cut energy costs by 50%, but while gasoline prices have retreated, electricity bills continue to climb. The Labor Department's September data showed electricity price hikes contributed to stubbornly high inflation. Reports suggest concerns over rising utility bills helped Democrats secure victories in recent gubernatorial and local elections in New Jersey, Virginia, and Georgia.
Electricity markets remain opaque, with price increases stemming from factors like transmission upgrades, commodity price swings, and costly fire-prevention measures—all varying by region. In many areas, activists have mobilized against large tax breaks for data centers. Analysts warn that data centers are straining power grids in regions where development outpaces utilities' ability to boost generation capacity.
While U.S. officials favor powering construction with natural gas and coal—while cutting renewable energy subsidies—many developers are now pursuing independent power sources to bypass supply chain bottlenecks and regulatory hurdles tied to traditional grid access.
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