Georgia regulators OK 50% power capacity boost, betting AI data center demand will materialize

It will be one of the largest construction operations in the United States to meet the insatiable demand for electricity from artificial intelligence developers. The construction cost is $16.3 billion, but employees say customers will pay between $50 billion and $60 billion over the coming decades, including interest costs and guaranteed profits for the monopoly utilities.

Georgia Power and the Public Service Commission pledge that larger users will pay more for their costs, and that spreading fixed costs across a larger number of customers, could significantly help lower residents’ electricity bills starting in 2029.

“Large energy users are paying more so families and small businesses can pay less, and this is a great outcome for Georgians,” Georgia Power CEO Kim Green said in a statement after the vote.

But opponents say the five Republicans elected to the committee are giving the green light to a risky bet by utilities to chase data center customers while leaving current taxpayers holding the bag if demand doesn’t materialize.

“The need for 10,000 megawatts of new energy resources for the system in the next six years is not here,” said Bob Scherer, an attorney representing some of the opponents. “It’s not, and it may never be.”

The approval came less than two months after voters rebuked GOP leadership, ousting two incumbent Republicans on the committee in favor of Democrats by wide margins. These two Democrats won campaigns that focused on six Georgia Power utility rate increases that commissioners have allowed in recent years, even though the company agreed to a three-year rate freeze in July.

Peter Hubbard and Alicia Johnson – Democrats who take office on January 1 – opposed Friday’s vote. But the current commissioners refused to postpone.

Electricity bills have emerged as a powerful political issue in Georgia and across the country, with popular opposition to data centers based in part on concerns that other customers will subsidize the energy demands of giant tech companies.

Georgia Power is the largest unit of Atlanta-based Southern Co. It says it needs 10,000 megawatts of new capacity – enough to power 4 million Georgia homes – with 80% of it flowing to data centres. The company has 2.7 million customers today, including homes, businesses and industries.

Whether the company’s forecast of a massive increase in demand will come true is the central argument. Georgia Power employees and the commission agreed Dec. 9 to allow the company to build or acquire all the capacity needed, though employees previously said the company’s projections included too much speculative construction.

In exchange, the company agreed that after the current price freeze ends in 2028, it will use revenue from new customers to put “downward pressure” on prices through 2031. That would amount to at least $8.50 a month, or $102 a year, for a typical residential customer. This customer currently pays over $175 per month, including taxes.

“So we’re taking the positives from this additional revenue, but allowing it to shift the downside and the risk to the company. And I’m really proud of that,” committee Chairman Jason Shaw said after the vote.

But “downward pressure” does not guarantee a lower interest rate.

“This doesn’t mean your bills are going down,” said Liz Coyle, executive director of consumer group Georgia Watch. “This means they may not be going up as quickly.”

Existing customers will pay for a portion of the build program that does not serve data centers. More importantly, opponents fear that Georgia Power’s pledge to ease interest rates will not be implemented, or will not last the 40 years needed to pay off new natural gas-fired power plants.

At a press conference on Monday, Hubbard likened it to a mortgage “to build a huge addition to your house for a new roommate, from Big Tech.”

“If the AI ​​bubble bursts in 10 years or data centers move to a cheaper state, the roommate will leave, but the mortgage won’t go away,” he said.

Staff say the commission should monitor demand closely, and that if data centers don’t use as much power as expected, Georgia Power should cancel its bulk power purchase agreements, close less efficient generating plants and look for additional customers.

Many opponents oppose any new generation powered by natural gas, warning that carbon emissions will worsen climate change. Police escorted some opponents out of the committee meeting after they began chanting “No! No! No! People say no!”

“Increasing natural gas production for the sake of these billionaire silicon kingpins seems like a lose-lose,” opponent Zach Norton told commissioners on Friday.