New report uncovers disturbing trend in everyday people's energy bills: 'This is a rapidly evolving landscape'

Data centers and crypto mines demand a lot of energy. The cryptocurrency bitcoin consumes more than Argentina annually, according to the Columbia Climate School.

A recent report from Energy Futures Group on behalf of Earthjustice revealed how electricity tariffs and contracts for these large facilities can impact the power grid and energy costs.

What are electricity tariffs and contracts for data centers?

Electricity tariffs and contracts determine how data centers pay for power. These agreements set rates for energy use and grid access. Electricity tariffs and contracts can include discounted rates, minimum demand requirements, and incentives for investing in local renewable energy sources.

Why are electricity tariffs and contracts for data centers important?

Electricity tariffs for large data centers impact energy costs for those facilities and residential customers. As data centers grow to support technologies such as artificial intelligence and crypto mining, they require massive amounts of energy.

A utility company's pricing structure determines who pays for infrastructure upgrades to support the energy demand. Utility companies can add protections in their contracts to avoid shifting some or all of those costs to existing customers.

Several states and companies have proposed or enacted changes. For example, AEP Ohio proposed that large new data centers pay for at least 85% of their projected needed monthly energy costs so new infrastructure costs are accounted for. Georgia state Sen. Chuck Hufstetler proposed a bill to prevent utility companies from charging higher rates to residential customers for data center demands, according to the Georgia Recorder.

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"Regulators need to shield residential and small business customers from shouldering the brunt of these new data center costs," Sylvie Ashford, an energy and policy analyst at The Utility Reform Network, told CalMatters.

How electricity tariffs and contracts can make energy costs fairer

The Energy Futures Group report highlighted positive changes some states' utility companies are making to "mega-load" facility contractors to protect existing customers.

For example, Duke Energy in North and South Carolina added a clause requiring data centers to invest in system upgrades. A utility operating in Indiana is amending its industrial power tariff to require initial contracts of at least 12 years for certain facilities. This ensures these facilities have a true investment in the area and pay their fair share of energy costs.

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"This is a rapidly evolving landscape," noted Earthjustice. By making these changes, energy companies can help prevent sudden rate hikes for households — one big step toward lower energy bills. They can also keep energy infrastructure reliable and ensure large- and mega-load facilities are accountable for their usage.