24
votes
There’s a reason US electricity prices are rising. And it’s not data centers.
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- Title
- Electricity prices are climbing, but not for the reason you think
- Published
- Oct 25 2025
I think not enough emphasis is given to companies' negligence of replacing and upgrading old infrastructure.
This could have been done gradually and continually to amortize the cost over a longer period of time, but that would have gotten in the way of immediate profits.
Instead they're having to upgrade everything at once which is obviously going to be more expensive.
Well, back in the 70s, all that infrastructure was practically brand new. And all that money being saved for maintainence and replacement is obviously better served as a temporary tax cut for boomers in those hard economic times.
Forever.
Reminds me of a situation in Kansas City, but with sewage. The city, like many older cities in the Midwest and Eastern US, had/has a combined sewer system. The problem with these is that when it rains a lot, stormwater can cause sewage overflows which spill into waterways. Which was pretty frequent. Well, the city did nothing until the EPA and DOJ sued the City. And in 2010, a consent decree was signed which required a few billion in sewage investments over 25yrs to fix and separate the sewage system from the stormwater system. Plus, the system was just ancient. Parts of it were over 100yrs old. The city obviously didn't have like $4bil lying around doing nothing. So the city raised the rates.
Sewage costs in KC proper were insane. My brother and I lived in a 2bdr/1ba ~850sqft (79m2) apartment. It was like $100/mo for sewage alone (with water, it was like $200/mo!). And this was only like 4-5yrs ago. All because for decades, the city underinvested and likely undercharged residents. So now people today are paying for it.
From what I've been reading the last few years, it seems like this is and will continue to be a gigantic issue for the US and other countries for the next several decades. A lot of the infrastructure for modern life was built out quickly in the last century, and it trundled along just fine for its service life. But now it's time to replace it, and political desires to do something exciting to get reelected don't exactly encourage saying "we're going to invest heavily in upgrading our sewage system".
Combine that with the fact that sprawling suburbs as a whole can't cover the cost of providing services to each lot at what people will consider a "reasonable" tax rate, and you have a time bomb for a good chunk of municipalities in the US.
Kinda wild, usually civilizations collapse because of issues outside their control caused them to not be able to maintain the cities infrastructure so gradually everyone moved away from the dying city.
Wild that for us it seems to just be that we lack the political will to maintain our society
So far. As things get worse, the desires of the voters will push further and further towards taking care of things as a basic need. And as the infrastructure ages at different rates, it'll need repairing at different times, and eventually it'll even out to continual demand for care. It's like when a single species finds an untapped resource: there's an initial burst of fertility, and then a die-off when that resource no longer fulfills the new demand. It'll balance out eventually.
Which is mall consolation for us today, as that's the work of decades when we're talking about civilizations.
That's ultimately why, when infrastructure projects (like say roads) are being planned and budgetted, only factoring install cost is gross miscalculation of TCO, and based on what I've seen on the local level, a pretty standard practice.
Every project should be spelled out in terms of permanent tax budget increase. Which should incorporate the following costs:
Amortized over the expected lifespan. With the expectectations that:
This of course will never happen, because spelling out true TCO of even small projects, like a suburb road, will balloon to eyewatering amounts which would kill a lot of frivolous projects that hide their true costs in debt-laden ponzi schemes.
It is impossible to cut taxes and maintain current infrastructure.
It is impossible to build new infrastructure without raising taxes.
Anybody telling you otherwise has a bridge to sell you.
Inner city infrastructure and building projects where there's high density can pay for themselves - and more. That applies also to infrastructure that serves these dense populations. A tunnel under the thames or a bridge over the Hudson could well prove to be prudent investments (Eg by increasing desirability of locations close to either end and encouraging their further development, crucially including greater density).
I suppose one could say these are raising taxes, just not on a "per person" basis.
To be clear, I'm not saying infrastructure should not be built. It's just that hypothetical future gains from building infrastructure should not be factored when budgeting to build said infrastructure. The gains from building said infrastructure will manifest in the forms of additional tax revenue from elsewhere.
So, perhaps it would have been more accurate to say 'tax revenue' than 'taxes.' It would be reasonable to cut tax rates in one area presuming that there was a sustainable increase in revenue elsewhere. However, given how close to the bone most tax structures in the USA have been cut, any extra revenue should probably be used to pay debts early or to cover inevitable shortages, like when the boomers die off and there's a lower tax base.
From the article:
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I'm not very knowledgeable in this area, but wouldn't increased demand require infrastructure expenditures (new substations, increased capacity wiring, etc)? Data Centers would be part of this increased demand it seems to me, although I don't know what the percentage is. Also, I would think that increased demand would likely cause some power generators to turn to more fossil fuel usage, and this would also indirectly increase infrastructure costs with more and more powerful storms like hurricanes causing damage as well as increased costs of making the infrasture more resilient in the face of these more energetic weather events.
But again, I'm not very knowledgeable.
Kind of, but not in this case. There is going to be some added transmission infrastructure, but the costs of maintaining the existing grid dwarfs that.
The study referenced says that the load increases in question are deployed in a way that has not demanded a ton of new infrastructure expenditures, but the increase in load does mean that there is more money coming in, which means the maintenence they were going to have to do anyway is now a smaller cut out of their revenue.
You see, the power cost drop is predicated upon the same kind of 'Buy 3, get 1 free' economics that most retail outlets use to decieve you into buying more.
Yes, if you needed 4, you save money. But if you only needed 2, you've increased your costs for no reason. If you needed 3, well the 4th is free but pretty wasteful unless there's a socialist system in play to freely distribute that excess to those who need it most.
In other words, if new data centers account for 10% of new demand, and we built 10 plants to account for all growth, that means we're building one extra power plant we wouldn't otherwise need.
I guess if 100% of all new power plants were solar/wind/nuclear (they're not), with substantial storage capacity to smooth demand spikes/drops (they don't), and that all the data centers get shutdown after the initial capex is recovered but well before plant EoL, so that we could shut off all the coal/oil/gas plants, that would be a net good.
Ten thousand homes will use maybe 10 megawatts of electricity, which is the same as a small data center. The data center’s connections to the grid might be pretty expensive, but you don’t need ten thousand of them. They’re also intentionally built in places where connecting to power is easier, as one consideration among many.
The costs of connecting individual houses to the grid add up fast, particularly in rural areas where they are far apart. The wiring has to be repaired after a storm, and burying it would be very expensive.
There’s a utility in Vermont that wants to install storage batteries in the most remote areas because it’s cheaper than burying the wiring.
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