A data center boom in Nevada is creating an unexpected headache for people living near Lake Tahoe. On the California side of the lake, a small utility now has to replace most of its power supply after its longtime Nevada provider said it can no longer serve the area. 

SFGATE reported that Liberty Utilities told the California Public Utilities Commission that NV Energy — which currently supplies about 75% of Liberty's electricity — had changed course and would stop providing that power by May 2027. 

The development quickly raised alarms in South Lake Tahoe, where residents and businesses worried about what the shift could mean for reliability. Mayor Cody Bass wrote to state regulators in April that locals were closely tracking the issue after hearing they could lose access to a key power source. 

Liberty, for its part, has publicly emphasized that customers are not facing an imminent outage. Still, the company's filing to regulators described NV Energy's decision as a surprise that required immediate action. 

What changed? Nevada has become one of the country's fastest-growing hubs for data centers, according to a report from the Desert Research Institute. Developers are drawn to the state's open land, relatively competitive energy costs, and business-friendly policies. 

As SFGATE reported, much of that buildout is centered near Reno, especially in the Tahoe Reno Industrial Center, where companies including Google, Apple, and Microsoft have projects. 

The power demand tied to that growth is massive. As cited by SFGATE, the Desert Research Institute estimated that 12 new data center projects alone would need about 5,900 megawatts of power — around 2.8 times Hoover Dam's output. SFGATE also reported that data centers accounted for 22% of Nevada's electricity use in 2024 and could reach 35% by 2030. 

Given the potential advantages of data centers and artificial intelligence, these facilities are unlikely to disappear anytime soon. However, neither is community opposition to them, which is rapidly picking up steam. 

Residents nationwide are rallying against these developments due to concerns about community well-being, environmental issues, and rising energy bills. 

In an email to SFGATE, Katie Jo Collier, a spokesperson for NV Energy, said the decision was based on an understanding made "well before data center load growth was a consideration."

For Liberty's roughly 49,000 customers in the Sierra Nevada, the biggest concern may be cost and access. Company President Eric Schwarzrock said the utility is looking for renewable energy at an affordable price, but he could not yet say whether rates will rise.

Liberty is in a uniquely tight spot: There are no transmission lines crossing the Sierra to connect South Lake Tahoe to California's grid, so the utility still depends on Nevada's transmission system to deliver power. 

That means even after Liberty finds a new supplier, it remains exposed to Nevada's grid constraints. Building a new line over the mountains would cost hundreds of millions of dollars and bring significant land impacts, according to Schwarzrock.

A planned Nevada transmission project called Greenlink could improve Liberty's options once it is completed, giving the utility access to a wider pool of energy providers and, potentially, more renewable power. 

"The growth has been tremendous," Desert Research Institute co-author Sean McKenna said, according to SFGATE. "I think it snuck up on a lot of communities, just how quickly things were moving." 

For Lake Tahoe customers waiting to see what comes next, Schwarzrock offered one more line of cautious optimism: As soon as Greenlink comes online, Liberty is "first in the waiting line."

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