At the State of the Union address Tuesday night, President Donald Trump is expected to announce agreements with Big Tech companies intended to prevent Americans from paying higher electric rates because of data centers.
Data centers are becoming an increasingly tense political issue, and one that doesn’t fit neatly in a partisan box. From a rural, deep-red county in Texas to Democrat-led cities like Denver and New Orleans, residents are pushing local officials to stop data center development. The State of the Union comes as electricity prices increased over 6% in January compared to a year earlier, and pressure is mounting on the federal government to address affordability.
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“These proposals will have long-term consequences we’ll be grappling with for years to come,” said Mandy DeRoche, deputy managing attorney at the nonprofit environmental law group Earthjustice. “As with tech companies’ recent promises to prevent the costs of powering massive data centers from falling on ratepayers, the devil is in the details.”
Trump’s speech will focus on the economy, including a section on data centers and electricity rates, according to reporting in The Wall Street Journal. White House officials told The Journal that Trump will announce “rate payer protection pledges” negotiated with tech companies to ensure the industry pays for increased electricity costs, and consumer rates do not rise.
What have the White House and Big Tech agreed to?
Specific information on the pledges are not currently available. However, developments in recent weeks provide a roadmap of what could be on the table between the tech industry and the White House. Most of the top AI companies have already made public statements addressing electricity prices.
In January, Microsoft unveiled a “Community-First AI Infrastructure Plan” which stated the company would “pay utility rates that are high enough to cover our electricity costs.” In a blog post later that month, OpenAI wrote, “we commit to paying our own way on energy, so that our operations don’t increase your electricity prices.”
Anthropic announced this month that the company will “pay for 100% of the grid upgrades needed to interconnect our data centers, paid through increases to our monthly electricity charges.” And this week, while announcing new data centers in Louisiana, Amazon cited an “ongoing commitment to fully funding the infrastructure needed to power our operations” and said it would pay for 100% of the costs.
The most recent action from the White House came in January, when key cabinet officials and a bipartisan group of governors signed a letter outlining recommendations for the grid operator PJM. The proposal led with a special auction where Big Tech would agree to enter into 15-year contracts to pay for new electric generating capacity on America’s largest regional power grid, which is home to the highest concentration of data centers in the nation.
What does it mean for Big Tech to pay its fair share?
The potential costs to the power grid extend beyond how much electricity data centers will consume directly, including the full cost of new power plants, transmission lines to serve loads and inflated prices for fuel due to higher demand. Because electric rates are set at the state level, consumer advocates question the strength of any ratepayer protection pledges.
Jackson Voss, government affairs and policy coordinator at the Louisiana-based Alliance for Affordable Energy, told Straight Arrow News that the word “pledge” sounds like a “handshake agreement between Silicon Valley and the White House,” and not anything legally binding.
“At the very least, an effective price pledge must cover all the electricity the [data] center uses, the additional capacity required to assure reliability, and all related transmission and infrastructure costs,” said Sean O’Leary, a senior researcher at the nonprofit think tank Ohio River Valley Institute.
O’Leary told SAN he wants to see requirements that tech companies face penalties if they walk away from a planned data center after electric grid investments are already made.
The pledges should also address transparency, Voss said, because in his experience advocating for consumer protections as Meta planned a giant data center in Louisiana, the tech industry typically makes deals with local governments and utility companies using non-disclosure agreements.
“There’s a great deal of uncertainty about what agreements are being made on our behalf as ratepayers,” Voss said. “They keep this stuff under lock and key.”
