With an influx of data centers moving into Georgia, state utility regulators are confronted with a monumental choice: to approve a proposal from Georgia Power Co. that plans to invest over $15 billion to expand its electricity capacity by 50% over the next six years. This expansion aims to accommodate the growing demands of artificial intelligence developers. Georgia Power, a major subsidiary of Atlanta-based Southern Co., asserts that this ambitious build-out will not only bolster the state’s economy but also position Georgia at the forefront of the global digital economy.
In recent testimony, officials from Georgia Power highlighted the substantial interest from numerous companies eager to establish operations in Georgia, underscoring the importance of progressing with this initiative. However, the potential impact on electricity bills has ignited significant political debate both in Georgia and nationwide, with concerns that the burden of these costs could fall disproportionately on other ratepayers.
The rising costs of electricity have already emerged as a central issue in recent elections, influencing outcomes in states like New Jersey and Virginia, which also have a high concentration of data centers. In North Carolina, Governor Josh Stein recently cited data center-related concerns while opposing a proposed 15% rate increase from Duke Energy.
In Georgia, the Public Service Commission, composed entirely of elected Republicans, is set to make a decision on Georgia Power’s proposal amid a backdrop of political upheaval. After recent elections, two incumbent Republicans were replaced by Democrats, partly driven by dissatisfaction with rate increases approved by the commission over recent years. Although Georgia Power agreed to a three-year rate freeze earlier this year, critics are apprehensive that regulators will hastily approve the proposal before the new Democratic members assume office in January.
Activists like Brionte McCorkle from Georgia Conservation Voters are wary of a potential last-minute favor to Georgia Power by the current commission, arguing that failing to heed public sentiment could set a concerning precedent. The utility company, which serves approximately 2.8 million customers, anticipates an increase in electricity demand that rivals only Texas over the next five years. Their estimates suggest a need for an additional 10,000 megawatts of capacity, predominantly directed toward data centers, on top of a previously approved 3,000 megawatts.
Regulators face a critical question: if Georgia Power overbuilds infrastructure and data center clients do not materialize as expected, who will bear the financial burden? The commission has adopted rules designed to ensure that data centers contribute to the associated costs of new power plants and transmission lines. However, if the projections fall short and infrastructure is constructed without sufficient customers to absorb the costs, other ratepayers may find themselves saddled with higher bills.
Public Service Commission staff estimates project that Georgia Power could require an additional $3.4 billion in yearly revenue by 2031, potentially translating to an increase of around $20 per month for residential customers. Georgia Power has disputed these claims, asserting that its contracts with new data center clients will cover all associated costs and provide guarantees to protect residential and smaller business customers from price spikes.
A recommendation from commission staff suggests that Georgia Power should only pursue building capacity after securing contracts for a minimum of 3,100 megawatts, with a total capacity of up to 7,400 megawatts reserved for agreements signed by mid-March. This approach may also help regulators avoid approving costly new natural gas-fired power plants, whose expenses have escalated due to manufacturing shortcomings.
While the company argues that imposing such restrictions would hinder its ability to attract data centers and stifle economic growth, the overarching concern remains centered on the potential costs to individual consumers. Activists like McCorkle are advocating for a regulatory focus that prioritizes the interests of residents over corporations, emphasizing the need to prevent what they perceive as corporate welfare for large tech companies. As the Dec. 19 vote approaches, all eyes are on the commission’s decision and its implications for Georgia’s energy landscape and economy.
