The new Amazon data centers in Madison will consume 50 to 100 percent as much electricity as every other home, business and industry on the Entergy Mississippi grid combined.
Any of the major AI platforms can quickly estimate how much electricity a $16 billion data center will consume. Perplexity AI, my favorite, states: “Based on industry benchmarks for hyperscale data center construction costs and power density, a $16 billion investment would likely support a peak electrical load between 800 megawatts and 1.6 gigawatts.”
The average load of Entergy Mississippi’s grid is somewhere around 1.7 gigawatts. Peak load, in August last year, was 3.4 gigawatts.
So the new data centers will consume anywhere from half to 100 percent of all the other customers on the Entergy Mississippi grid combined. That’s a huge impact on our state. There are 384,000 Entergy Mississippi residential customers, a third of the entire state.
You can think of a data center as one huge electricity sucking machine. Amazon would end up spending something like $800 million dollars a year on electricity if it had the same rate as residents, which it does not.
The problem here is that we don’t know how much Amazon is going to pay for all this electricity. Senate Bill 2001 deems the Amazon rate to be a “trade secret.”
How can an electricity rate be a “trade secret?” That’s a bunch of hooey. It’s not a trade secret. It’s that Entergy and Amazon don’t want the public to know what a cut rate deal Amazon is getting.
Why? Because all the other ratepayers are going to have to pick up the slack of Amazon’s special deal. If Amazon is paying half the residential rate, this could be a discount of $400 million or so a year. That’s $500 to $1,000 a year that the average residential homeowner will have to eat.
The math is not complicated. I’ll use an analogy. Suppose three people go each Thursday to McDonald’s for lunch. Everybody buys the same cheeseburger and they all split the bill. Everybody pays the same and it’s fair.
Now suppose a fourth person joins the party. But this person buys three cheeseburgers instead of one. But when the bill comes, they split it evenly four ways. Now the original three people are paying 50 percent more. It’s no longer fair. That’s how Amazon will increase electricity bills.
If you don’t believe me just search the Internet and you’ll find numerous studies showing that data centers are dramatically increasing the cost of residential electricity. This is no secret. I could not find a single study indicating that data centers will lower residential electricity costs, which is what Entergy is claiming.
Given this, you would think our state leaders would be cautious about exempting the Amazon data centers from all our utility regulations. Instead, they threw caution to the wind and approved the entire enabling legislation in two days, start to finish. Haste makes waste.
That’s not a lot of time to study a 316 page bill. The first 250 pages are all the tax exemptions given to Amazon. So if you think the data centers are going to be paying for schools and roads, you better go read the bill.
Section 22, all of nine pages, is the crux of Senate Bill 2001. These nine pages create a whole new set of special rules, if you want to call them that, that apply only to Amazon. These nine pages completely gut decades of utility regulatory law and push aside the Public Service Commission (PSC), whose job it is to protect ratepayers from the government sanctioned utility monopolies.
The final 50 pages are all existing PSC regulations that Amazon is exempted from. These are finely crafted laws, evolved over decades, to protect consumers. But in a two-day session, our state leaders threw them out the window.
One such law, from which Amazon is exempted, requires the PSC to hold fairness hearings for any special rate for big Entergy customers. This is precisely to prevent the very thing that is about to happen: Ratepayers getting screwed by a government-sanctioned monopoly making special deals.
Hey, if Entergy Mississippi wants to compete in a free market, so be it. They can charge whatever they want. But by law, nobody can provide electricity but Entergy Mississippi and the other government sanctioned monopolies. Each monopoly has their own territory and nobody can provide electricity but them.
Our state leaders, in all their wisdom, have now given a state-sanctioned monopoly free reign to do whatever they want. It’s a recipe for higher residential utility bills.
I don’t blame Entergy Mississippi in the least. Their stock is up $13 billion dollars since the Amazon data centers in Mississippi and Louisiana were announced. That should give you a clue as to what’s going to happen to residential rates. It would be interesting to know how many state legislators bought Entergy stock before and during the special session. Kicking myself that I wasn’t that smart.
The more Entergy spends on the grid and power plants, the more it makes. Entergy gets a 10 percent guaranteed annual return for the life of the investment. Amazon’s huge power consumption gives Entergy the excuse to spend $2 or $3 billion on new generating plants.
Amazon will also benefit hugely by getting a cheap rate for electricity. Amazon and Entergy make out like bandits, while the average ratepayers are left with the bill.
So the question remains: Why would the state legislators do such a thing? They lower taxes to give the average household more spending money then they enact legislation that will raise utility bills. The higher utility bills will offset the benefit of the lower taxes.
Superficially, a big new data center sounds great. New construction. New jobs. (Although data centers are highly automated.) But the legislature isn’t supposed to be superficial. They’re supposed to be deliberate and responsible. Two days of deliberation for a $16 billion project is borderline negligence. But everybody wants to be in the photo op.
The basic rank and file legislators just showed up and did what they were told. That makes sure they get their $10,000 from the party leaders come election time.
The party leaders now have billions of contracts to subtly manipulate. That’s why the data center deal is exempt from normal state bidding laws. It’s a $16 billion no-bid free for all.
That’s a lot of money to find its way back to the coffers of the political parties, a small portion of which is doled out to the rank and file. Everybody’s re-elected and happy.
Except for those of us paying the bill.
