All these data centers are gonna fry my electric bill … right?

Summary

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Podcast Summary: The Indicator from Planet Money

Episode Title: All these data centers are gonna fry my electric bill … right?
Date: February 3, 2026
Hosts: Wayland Wong & Stephen Bassaha

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Episode Overview

This episode tackles one of the hottest debates in energy economics: whether the explosive growth of data centers—driven by AI and cloud computing—means higher electric bills for regular consumers. Amid political and public backlash against power-hungry server farms, hosts Wayland Wong and Stephen Bassaha investigate the real impact of data centers on electricity rates, exploring three potential futures and the complexities of utility planning.

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Key Discussion Points & Insights

1. Why Are Data Centers Under Fire?

• Protests & Political Opposition:
  Data centers have sparked widespread protests and rare bipartisan complaint, with politicians as different as Bernie Sanders and Ron DeSantis speaking out.

  • Quote [00:17]: “Two men I’m pretty sure wouldn’t even agree that, you know, water is wet.” – Wayland Wong

• Concerns Raised:

  • Energy consumption and potential for higher bills.
  • Water usage.
  • Broader anxiety about the future of AI.

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2. The Data Center Effect on Electric Bills

• Current Trend:
  Electricity prices are up 7% year-over-year, outpacing general inflation ([00:48]).
• Big Fear:
  Data centers could raise rates further as more come online.
• Counterpoint:
  Host Stephen Bassaha notes, “That is not inevitable. … it is even possible for data centers to cause power bills to go down.” ([01:05])

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3. Three Futures for Your Power Bill

Guest Expert: Greg Upton, Executive Director, LSU Center for Energy Studies ([02:31])

Scenario 1: Overbuilding (Too Much Supply)

• Utilities overestimate demand from data centers, resulting in surplus power plants.
  • Benefits: More efficient power generation, modern infrastructure ([04:29]).
  • Pitfalls:
    • Unused plants are expensive; ratepayers foot the bill.
    • Batteries not advanced enough to store surplus energy.
    • “...the amount of capital that you’re spending is not worth that.” – Greg Upton ([05:03])
• Example: Ohio requires data centers to pay for 85% of capacity they reserve ([05:13]).

Scenario 2: Underbuilding (Not Enough Supply)

• Demand outpaces utility projections; not enough new generation is built ([05:32]).
  • Outcome:
    • Older, less efficient, more expensive plants get reactivated.
    • Prices rise as utilities scramble to catch up.
    • Quote: “In that instance, you can also have higher costs.” – Greg Upton ([06:03])

Scenario 3: Goldilocks Zone (Just Right)

• Utilities get demand exactly right and invest accordingly ([06:12]).
  • Result:
    • Economies of scale make energy cheaper for everyone.
    • Large new plants are more cost-effective; if data centers pay their fair share, bills can fall.
    • Quote: “It comes to regulators getting it right… building out the appropriate amount of capital and... protecting ratepayers.” – Greg Upton ([07:16])

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4. The Political and Regulatory Landscape

Insight from Ari Pesco, Director, Harvard Electricity Law Initiative ([07:35])

• Challenge:
  Utilities and data centers sometimes strike deals favoring large customers, shifting costs to residents.

  • Quote: “Utilities are competing right now to attract data centers. … there is now no better reason to build infrastructure than data centers.” – Ari Pesco ([07:55])

• Regulatory Weakness:

  • Utilities have more resources and control critical information, making oversight difficult for regulators.
  • Quote: “Utility regulation is hard in part because the utility controls all the relevant information.” – Ari Pesco ([08:47])

• Public Backlash as a Check:
  Although public resistance can pressure utilities not to give away too much, Ari Pesco remains skeptical:

  • “We have some safeguards… They don’t always work.” ([09:19])
  • Memorable Analogy:
    “This sounds less of a Goldilocks zone… and sounds more like—to go biblical for a second—putting a camel through the eye of a needle.” – Stephen Bassaha ([09:05])

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Notable Quotes & Memorable Moments

• [00:17] Wayland Wong: “Two men I’m pretty sure wouldn’t even agree that, you know, water is wet.” (On Sanders and DeSantis both opposing data centers)
• [05:03] Greg Upton: “...the amount of capital that you’re spending is not worth that.”
• [07:16] Greg Upton: “It comes to the regulators getting it right, it comes to the utilities getting it right…”
• [09:05] Stephen Bassaha: “It sounds less of a Goldilocks zone… and sounds more like—to go biblical for a second—putting a camel through the eye of a needle.”
• [09:19] Ari Pesco: “Maybe the hole’s a little bit bigger. Maybe we could choose a smaller animal. But look, I think we have some safeguards, some protections. They don’t always work.”

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Timestamps for Key Segments

• 00:12–01:05 — Introduction: Political backlash & why data centers are blamed for high electricity rates
• 02:31–03:49 — Greg Upton introduces the three scenarios
• 03:58–05:26 — Overbuilding explained; how excess supply can hurt consumers
• 05:32–06:12 — Underbuilding scenario; how underestimating demand can also drive up costs
• 06:12–07:16 — Goldilocks scenario and the importance of economies of scale and fair cost-sharing
• 07:35–09:19 — Ari Pesco on incentives, regulatory challenges, and why it’s hard to protect the public from bad deals

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Takeaway

While the rise of massive data centers could drive electric bills higher, especially if utilities misjudge future demand or strike unfavorable deals, there is a slim but hopeful possibility for smarter planning and regulation to keep—or even reduce—costs. Ultimately, hitting that “Goldilocks zone” will require careful, informed decisions and strong oversight, rather than leaving everything to chance or market forces.

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Transcript

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[Wayland Wong]

Data centers are getting a lot of heat right now. There are protests against them, cities voting to keep them out. You even have both Bernie Sanders and Ron DeSantis speaking out against data centers. Two men I'm pretty sure wouldn't even agree that, you know, water is wet.

[Stephen Bassaha]

You know, data centers, they are essentially warehouses packed with computers that make cloud computing and AI possible. And there are a lot of different reasons people have for opposing them, like concerns about AI and worries about the tons of water they use. And then there's the fear that data centers will lead to higher electric bills.

[Wayland Wong]

Electricity prices are up about 7% year over year, way higher than overall inflation. And that's driven in part by this flurry of power hungry data centers. And the concern is that all the new centers coming online will only drive electric rates even higher.

[Stephen Bassaha]

But that is not inevitable. This data center electric bill upcharge is not a guarantee. In fact, it is even possible for data centers to cause power bills to go down.

[Wayland Wong]

This is the indicator from Planet Money. I'm Wayland Wong.

[Stephen Bassaha]

And I'm Stephen Bassaha. Today on the show, we look at three possible futures for your power bill. Futures where power companies over prepare for AI under prepare and in the Goldilocks scenario where everything goes right and your electric bill could actually get cheaper.

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[Wayland Wong]

To lay out our three futures is Greg Upton. He's the executive director for Louisiana State University's center for Energy Studies.

[Greg Upton]

There's no reason that inflation adjusted electricity prices have to increase over time.

[Stephen Bassaha]

It sounds like you are not a electric price data center doomsayer.

[Greg Upton]

I'm definitely not a doomsayer.

[Stephen Bassaha]

The groups responsible for determining which future we end up with are power companies and their regulators.

[Greg Upton]

The regulator could be called the Public Service Commission, the Public Utility Commission, the name can change based upon the state.

[Wayland Wong]

Whatever you call them, those regulators and utilities need to get together and make a bet. The bet being on just how much electricity data centers will actually need. And there is a huge range of predictions here.

[Stephen Bassaha]

One estimate is that data centers will take up an incredible 16% of all energy used in the US by 2030. I mean, huge amounts. Some other estimates, though, are way more conservative. Like one is less than 7%.

[Wayland Wong]

Greg says essentially the utilities present regulators with a story about how much demand they think there will be from the new data center and how much power the utility wants to bring online to match, like by building new natural gas plants, renewable energy sources, and nuclear power plants.

[Greg Upton]

And then the regulator, if they have a successful story, is going to prove the utility in order to build that additional generation.

[Stephen Bassaha]

And then we'll have to wait to see if they bet right. And that will likely play out in one of three scenarios. Scenario one, they got it wrong. Data centers don't need that much electricity. You know, maybe AI flops or data centers just get much more energy efficient. Whatever the reason, the utilities have all overbuilt and have excess power.

[Wayland Wong]

Greg says utilities tend to end up overbuilding. Their version of being cautious.

[Stephen Bassaha]

Probably doesn't hurt that they, you know, make money by building more plants. And there are still benefits in this construction zealous future.

[Greg Upton]

Well, on one hand, the whole grid's actually going to run more efficiently. You've got this new generator. That new generator is probably going to be more efficient than a lot of your legacy older generators.

[Wayland Wong]

But there's also a big downside.

[Greg Upton]

On the other hand, you built this capital, and that capital is going to have to be paid for by ratepayers.

[Wayland Wong]

You might think all that extra supply of power would lower costs, but it's hard to store electricity. Batteries just aren't that good yet. So we're stuck with paying for that unused power or power plants just sitting there idle.

[Greg Upton]

And so if you build over bill generation, you might have fuel savings in the short run, but the amount of the capital that you're spending is not worth that.

[Stephen Bassaha]

Regulators can hedge against this by requiring data centers to pay for a certain amount of power, even if they don't use it all. That's what Ohio regulators did. Data centers there will have to pay at least 85% of electricity they said they would need.

[Wayland Wong]

Greg says this overbuild scenario would likely cause residents power bills in the community to go up.

[Greg Upton]

That's scenario one. The other scenario is that electricity demand grows very rapidly, way faster. Than you projected.

[Stephen Bassaha]

So this is the case where the utilities underbuilt. They're not generating enough power to meet the new demand.

[Wayland Wong]

Utilities could then start building new plants, but that takes time. So while they try to catch up, Greg says they'd be bringing online older power plants, plants that are less efficient and cost more to run, and that drives up the price of electricity.

[Greg Upton]

And so in the instance that you don't build out the new generation, in that instance, you can also have higher costs.

[Stephen Bassaha]

Then there's scenario three. Building not too much, not too little, but getting it just right.

[Greg Upton]

And so it's this Goldilocks zone.

[Wayland Wong]

This is that magical scenario where electric bills could be lower or at least, you know, rise slower than inflation. And it comes down to economies of scale.

[Stephen Bassaha]

Essentially, economies of scale means that companies often get more efficient as their business grows. The same concept applies to power generation.

[Greg Upton]

Economies of scale definitely, definitely can play in in order to supply that in the most efficient way.

[Wayland Wong]

Newer, larger plants can be more cost efficient. And if the data centers pay their share, then this is that Goldilocks case where the electric bills get cheaper.

[Stephen Bassaha]

Okay, but you know, that pay their share bit. Greg says that's another balancing act.

[Greg Upton]

You can get a good deal, or you could get a bad deal, right?

[Wayland Wong]

Utilities and regulators often set a separate rate for large customers like data centers. If the centers end up paying too little, then the rest of the utilities customers will be stuck paying more for those new power plants.

[Greg Upton]

And so, again, it comes to getting it right. It comes to the regulators getting it right, it comes to the utilities getting it right. And kind of meeting that goldilocks that we talked about to build out the appropriate amount of capital and while at the same time protecting ratepayers in order to have access to affordable and reliable energy.

[Stephen Bassaha]

So how likely is it that utilities will make good deals for residents? That's what I asked Ari Pesco. He's the director of the electricity law initiative at Harvard.

[Ari Pesco]

So, unfortunately, the incentives here for the utility and the data center are not great from the public's perspective.

[Wayland Wong]

He says the reason for that is because utilities are competing right now to attract data centers.

[Ari Pesco]

Because the utility industry makes money by building infrastructure. That's where their profits come from. And there is now no better reason to build infrastructure than data centers.

[Stephen Bassaha]

And a great way to beat out another state or utility for that data center business. Offer a sweetheart deal where the utility isn't paying all that much and residents are essentially subsidizing the costs with higher electric bills.

[Wayland Wong]

He says the one mitigating factor here is all the public backlash to data centers that could put pressure on utilities as they set these rates. But RA doesn't expect that to go too far. After all, these utilities are typically monopolies.

[Ari Pesco]

There's a reason that for 150 years in this country we have regulated monopoly providers.

[Stephen Bassaha]

Well, okay, but. Yeah, but you're right, we have those regulations. What in that kind of. We have public service commissions and other groups don't we are. Does that not solve this issue?

[Ari Pesco]

So utility regulation is hard in part because the utility controls all the relevant information.

[Wayland Wong]

Yeah, the utilities have way more information about their own operations, not to mention way more resources than cash strapped regulators for things like lawyers and analysts.

[Stephen Bassaha]

So it sounds like to you this sounds like less of a Goldilocks zone to try and hit that could benefit consumers and sounds more like to go biblical on you for a second, putting a camel through the eye of a needle.

[Ari Pesco]

You know, maybe the hole's a little bit bigger. Maybe we could choose a smaller animal. But look, I think we have some safeguards, some protections. They don't always work.

[Wayland Wong]

So yes, it's possible for electric rates to drop if everything lines up right. But that doesn't sound like a bet Ari is planning on making. If you liked this episode, send it to a friend who might like it too. Word of mouth is how we grow. So spreading the word is supporting our journalism.

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