Big Tech is striking secret deals to make you foot its electricity bill, Harvard researchers say

[Cpvr]

• Big Tech's secretive electricity deals with utilities may raise costs for Americans, Harvard researchers reported.
• Data centers could consume 12% of US electricity by 2028, up from 4% in 2023.
• Researchers call for more scrutiny of contracts to protect consumers from higher bills.

Tech companies racing to secure power for their data centers have struck dozens of secretive electricity deals with utilities that could cost average Americans a "staggering" amount, Harvard research found.

With data center construction on the rise and utility costs top-of-mind for many Americans, the Harvard Electricity Law Initiative reviewed 40 special contracts that state regulators have approved between utilities and data centers. If these contracts offer discounted electricity rates to data centers, and new power grid infrastructure is needed to serve them, other customers may end up paying for the shortfall through higher utility bills.

But it's nearly impossible to know the exact price tag of any cost shifts because the terms of these special contracts are hidden from public view, the report found. State regulators usually approve utilities' requests for confidentiality, limiting public scrutiny. That means billion-dollar contracts are getting approved without a transparent accounting of the costs and benefits, researchers said.

"When we have potentially billions of dollars going through these secret contracts where there's just not a lot of investigation about what's going on, we think there's reason to be suspicious that utilities may be offering discounts that are subsidized by everybody else," said Ari Peskoe, director of The Harvard Electricity Law Initiative and coauthor of the paper with Eliza Martin, a legal fellow.

The report lands as data center construction is booming, in part to serve Big Tech's artificial intelligence race. Some AI data center complexes need as much power as entire cities and by 2028, the industry could account for 12% of US electricity consumption — up from 4% in 2023, according to federal estimates. The trend is leading some citizens, state policymakers, and at least one utility to try to shield households from rising bills.

Utilities and tech companies have told Business Insider that the contracts they negotiate should cover the costs of any power grid upgrades required to serve data centers. Lucas Fykes, director of energy policy for the Data Center Coalition, which represents companies including Amazon Web Services, Google, Microsoft, and Meta, said in an emailed statement that the industry is committed to paying its full cost of service.

Fykes added that the Harvard research overlooks a finding in Virginia — the world's largest data center market — that the industry is paying the appropriate costs for its energy use. In December, an independent study commissioned by Virginia's Joint Legislative Audit and Review Commission found that rates "appropriately allocate costs to the customers responsible for incurring them, including data center customers."

The report also said that data centers' increased energy demand will likely increase costs for everyone, including residents and businesses. A large amount of new power plants and transmission lines will be built that otherwise wouldn't be needed, if not for data centers. A typical residential customer in Virginia could see an extra $14 to $37 each month on their utility bill by 2040. The report said creating a separate category for data centers and changing the way costs are allocated across customers could help insulate households from statewide cost increases.

Peskoe recommended greater scrutiny and regulation of special contracts, as well.

"We didn't realize how extensive these secret contracts were," Peskoe said. "The more we dug, the more we kept finding."

Regulators are required to protect the public from 'cutthroat' practices. Researchers are skeptical.​

State and federal regulators allow most utilities to spread the cost of power grid upgrades across their customer base. This is typically done through what's known as a rate case increase, a lengthy and public process at state public utility commissions. Consumer advocates, environmental and industrial groups, and other outside parties regularly intervene.

By contrast, most of the special contracts that Peskoe and Martin reviewed were approved by public utility commissions with "only cursory analysis" and little or no public evidence to back up claims that data center energy costs would be isolated from other customers' bills. While regulators in many states are required to protect the public from "cutthroat" practices that harm ratepayers, Peskoe said he's skeptical.

Peskoe said state regulators can face political pressure to approve big economic investments already touted by elected officials for their economic impacts. He added that utilities have a long history of "exploiting their monopolies" to attract competitive lines of business.

Peskoe pointed to an antitrust lawsuit that a small non-profit utility brought against Duke Energy. Court documents revealed that Duke offered Fayetteville, North Carolina, a special contract with a $325 million discount and acknowledged that it would lose $100 million on the deal, but planned to recoup those losses by raising rates on other customers. Duke Energy, which argued its conduct was legitimate price competition and lawful, petitioned the Supreme Court to review the case in February.

Duke declined to comment, and the Edison Electric Institute, a trade group that represents investor-owned utilities, didn't return a request for comment.

While the case doesn't involve data centers, Peskoe said it illustrates how utilities compete for big energy customers and can hide how they pass those costs onto other customers.

The Harvard study said states could have stricter rules for special contracts, similar to those in Kentucky, where public utility commissioners only allow utilities to offer discounted rates for five years, and there must be more than enough power supply available on the system. The rate also must exceed the utility's costs to serve the customer, the study said.

Source: https://www.businessinsider.com/big-tech-secret-energy-deals-utility-bills-cost-consumers-2025-3

 

[Joe Riley]

The Big Problem with Big Tech​

"The consumer welfare standard was a radical idea when it was first proposed by Judge Robert Bork in the 1970s. Beforehand, when reviewing mergers and acquisitions under antitrust law, judges typically considered an array of factors, such as impact on small businesses and effect on income distribution. In contrast, under the consumer welfare standard, judges refrain from taking actions against mergers of mega-corporations so long as the merger would benefit consumers through lower prices and better services. A brainchild of legal conservatism, CWS’s rise coincides with the Reagan presidency, and is widely credited for economic growth across industries."

"Today, the consumer welfare standard, once a decidedly conservative product, has become the new gold standard, applied and lauded by scholars left and right. In 2019, when most conservatives weren't yet focused on tech platforms, the limelight was on then-presidential candidate Elizabeth Warren, who included “breaking up big tech” as part of her campaign platform. “Today’s big tech companies have too much power — too much power over our economy, our society and our democracy,” she proclaimed."

"However, an old-school split-up won’t do much. Tech platforms, unlike 20th century railroads, have no marked physical boundaries. Splitting up Instagram and WhatsApp from Facebook will neither achieve the Left’s desire to micromanage speech nor aid Sen. Hawley’s crusade against “wokeness.” More lawyering up and more internal corporate bureaucracy will be the likely outcome. I won’t belabor Section 230; Cola Buskirk has previously written an excellent piece on that in the Review. A modern antitrust agenda, generally speaking, should correct current biases in our system and curb big tech’s political power." READ MORE

 

[Joe Riley]

Amazon’s International Expansion Strategy: What We Can Learn​

Sherwin Williams used the catchy ad slogan: "We Cover the Earth"! Amazon is working at doing it!

Amazon’s Global Dominance: Decoding the International Expansion Strategy

"Imagine a behemoth that controls nearly half of all online retail sales in the United States, boasting a market capitalization exceeding $1.7 trillion (Nasdaq, 2024). Now, picture this same giant replicating its success across continents, navigating diverse cultures, and tailoring its offerings to local preferences. This is the story of Amazon’s international expansion strategy, a masterclass in global market domination."

"But conquering the world stage isn’t without its hurdles. Companies venturing into unfamiliar territory often face a minefield of challenges, from navigating complex regulations and cultural nuances to adapting to disparate logistics and payment systems. The graveyard of failed international expansions is littered with brands that underestimated the complexities involved."

"So, how has Amazon, against all odds, not only survived but thrived in this global arena? What are the secrets behind its international expansion strategy that have propelled it to the top of the e-commerce food chain? This article delves deep into the intricate world of Amazon’s international playbook, dissecting its winning strategies and offering invaluable insights for businesses seeking to replicate its success." READ MORE

 

[Axel Slingerland]

If anyone is surprised that the richest people in the world always want more, more, more... Is it comfortable living under a rock?

 

[Jacob Petersheim]

If anyone is surprised that the richest people in the world always want more, more, more... Is it comfortable living under a rock?

How much of it is "wanting more" and how much is expansion to "stay in the game?"

I'm reminded of Monopoly, where as a game progresses you have to get richer and richer or you fall out unable to compete as your holdings get eaten up.

 

[Joe Riley]

The Breakup of "Ma Bell": United States v. AT&T

"AT&T was founded in 1885 as a subsidiary of Alexander Graham Bell’s American Bell Telephone Company. On December 30, 1899, AT&T acquired Bell Telephone and became the parent company. By the 1970s, it had grown to become the largest company in the world."

"The company was composed of several entities: Western Electric, which manufactured telephone equipment; Bell Laboratories, the company’s research and development arm; Long Lines, the provider of long-distance phone service; and twenty-four local operating companies (twenty-two of which AT&T owned in full), each covering a region, state, or large metropolitan area to provide local phone service nationwide. Referred to colloquially as “Ma Bell” beginning in the 1960s, AT&T completely dominated the telecommunications industry in the United States."

"The company was a monopoly, to be sure, but considered itself a natural monopoly—the provider of a service for which the operating costs were so high that only a single company could do it efficiently. Moreover, AT&T’s leadership had long taken the position that it was only able to serve all consumers by maintaining a series of cross-subsidies—that is, subsidies funded by AT&T’s more profitable services to support its less profitable ones."

"By charging above-cost rates for long-distance service, service in urban areas, and business services, AT&T could keep prices low for local telephone service, service in rural areas, and residential services, respectively. This framework, AT&T asserted, was only feasible if it retained sole control over the markets, because a competitor free to target the sectors subjected to above-cost rates would drive those rates down, rendering subsidies infeasible and driving prices up for critical services. AT&T believed, therefore, that despite its size and market control it had not violated the antitrust laws." READ MORE

 

[Mary Stetler]

It sure seemed easier with Ma Bell taking care of things. Now that everything is split up, her prices go higher.
????

 

[Jacob Petersheim]

The old Bell System had its flaws and there are things it did that I still think were negatives. But its primary business was pretty solid and its managed innovation gave subscribers solid reliable customer gear and very reliable service. Think about the rinky-dink phones after the breakup that could break if you looked at them wrong. Think of how seldom you had to request repair service because something with wrong with your line outside the home.

Looking back, the biggest flaw was probably the high cost of long-distance calls. But a lot of that was a limit of the technology of the time. Post-breakup a ton of high-bandwidth fiber optic intercity line has been installed. That made the calls cheaper than heavy reliance on copper cables and microwave relays and later satellite radio relay as we had in the past.

There is a big story there, and much of it has been forgotten while a lot of it has never been known by the average Joe. Back in those days you didn't take data communications for granted, even though it certainly existed before the public Internet or the individual use of telephone modems once PCs became common.