Instead of socializing costs, some utilities are charging data centers premium rates. This revenue not only covers new infrastructure costs but, in some cases like Georgia, is used to provide bill credits or reductions to existing residential and commercial customers, effectively subsidizing them.

The impact of data center demand on consumer bills hinges on regional utility structure. In regulated markets, costs can be isolated. However, in deregulated markets (e.g., NJ, IL, OH), prices fluctuate with supply and demand, making it nearly impossible to shield residential consumers from rate increases.

While currently straining power grids, AI data centers have the potential to become key stabilizing partners. By coordinating their massive power draw—for example, giving notice before ending a training run—they can help manage grid load and uncertainty, ultimately reducing overall system costs and improving stability in a decentralized energy network.

AI companies are building their own power plants due to slow utility responses. They overbuild for reliability, and this excess capacity will eventually be sold back to the grid, transforming them into desirable sources of cheap, local energy for communities within five years.

The race to build power infrastructure for AI may lead to an oversupply if adoption follows a sigmoid curve. This excess capacity, much like the post-dot-com broadband glut, could become a positive externality that significantly lowers future energy prices for all consumers.

Rather than viewing the massive energy demand of AI as just a problem, it's an opportunity. Politician Alex Boris argues governments should require the private capital building data centers to also pay for necessary upgrades to the aging electrical grid, instead of passing those costs on to public ratepayers.

The public power grid cannot support the massive energy needs of AI data centers. This will force a shift toward on-site, "behind-the-meter" power generation, likely using natural gas, where data centers generate their own power and only "sip" from the grid during off-peak times.

To circumvent grid connection delays, infrastructure costs, and potential consumer rate impacts, data centers are increasingly opting for energy independence. They are deploying on-site power solutions like gas turbines and fuel cells, which can be faster to implement and avoid burdening the local utility system.

To overcome local opposition, hyperscalers are creating novel utility contracts that have zero financial impact on local ratepayers. They agree to guarantee a return on the utility's specific capital expenditures, ensuring data center costs are not passed on to other customers.