As AI backlash grows, Trump says firms should pay more for electricity

WASHINGTON – More than 200 companies and politicians in the US, including some of the country’s largest utilities, have signed a voluntary pledge to prevent AI data centres from driving up electricity costs for millions of Americans, President Donald Trump said on July 23.

The pledge is largely symbolic, and experts have said it could be difficult to enforce because power prices are often determined by state regulators. But it underscored the extent to which rising energy bills have become a top concern for voters – and a potential liability for Republicans – ahead of the midterm elections.

Trump first announced the initiative, which he called a “ratepayer protection pledge”, during his State of the Union speech in February. The following month, the White House secured promises from tech companies such as Amazon, Google and Microsoft to pay a greater share of the enormous costs associated with delivering electricity to new data centres.

During an event at the Environmental Protection Agency on July 23, Trump said the pledge had attracted new signatories, including utilities like NextEra Energy, Southern Company and Duke Energy that supply electricity to millions of households.

“We know that the data centres and AI are dramatically increasing the demand for electricity,” Trump said. “It’s only fair that the cost of building the new infrastructure to meet this demand should be borne by the corporations themselves, not by the American consumers and the American patriots.”

In addition to the utilities, the new signatories include major data centre developers such as Equinix and Digital Realty. Twenty-three Republican governors also signed on.

The White House did not reach out to Democratic governors about joining the pledge or attending July 23’s event, according to three people briefed on the matter who spoke on the condition of anonymity because they were not authorised to comment publicly.

No Democratic governors have signed the Trump administration pledge. Many Democratic governors have announced their own plans to prevent data centres from increasing energy costs in their states.

Trump has been a major booster of artificial intelligence, which he has said is essential to winning the technology race against China. The EPA has taken several steps to make it easier to build data centres, such as loosening limits on smog-causing pollution from the gas turbines that often power the facilities.

Many communities around the country have begun strongly opposing the behemoth projects. A recent Gallup poll found that Democrats and Republicans alike would oppose the construction of a data centre in their neighbourhood, with many citing concerns about the potential noise, pollution, and energy and water usage.

“They need some PR help,” Trump said of tech companies in March, when he initially announced his ratepayer-protection pledge.

New York last week became the first state to enact a moratorium on new data centres. Govenor Kathy Hochul, a Democrat, signed an executive order pausing the construction of the largest data centres for one year while the state assesses their energy use and effects on the environment.

More than a dozen other states have considered similar action, according to the National Conference of State Legislatures.

On July 23, Trump made the case that communities would benefit from accepting data centres. He noted that teachers in Richland Parish, Louisiana, recently received US$50,000 (S$64,600) bonuses as a result of an increase in sales tax revenue generated by a Meta data centre under construction. Other utilities have claimed that lucrative data center deals have allowed them to lower rates for other customers.

“You have communities that really want the data centres, and frankly, those are the smart communities because it means tremendous numbers of jobs and very little actual disruption,” Trump said.

He said that people opposed to data centres were “radical left communists” who “would not lower your electricity bills. But they would actually increase them very substantially because you wouldn’t have this money pouring in”.

While Trump campaigned on a pledge to cut power prices in half, average US residential electricity rates have risen nearly 18 per cent since he returned to office, according to the most recent available data from the federal government.

While data centers are not primarily responsible for the increase in electricity prices, they do have the potential to push up costs in some places, experts said.

Many of the giant facilities being built to train cutting-edge AI models need as much electricity as a small city. That means they can require billions of dollars’ worth of new power plants, transmission lines and other upgrades to connect to the local grid.

If the electric bills paid by data centres do not cover all those costs, other customers have to make up the shortfall. Demand from data centers can also outstrip supply, driving up prices.

Increasingly, many tech companies are also building and paying for their own off-grid power plants, largely fueled by natural gas, as Meta is doing with a data center in El Paso, Texas. Trump has encouraged those efforts, which have less of an effect on the grid, although they can add to air pollution.

In a recent interview with CBS News, Hochul questioned whether the companies that signed Trump’s pledge would follow through on their promises.

“Asking these companies to keep their word on how much they’re going to consume – I’m more realistic than that perhaps,” she said. NYTIMES

• This article originally appeared in The New York Times.