The utility says customers could actually see rates dip as more power-hungry data centers connect to the grid. But that’s after rates shot up 70% since 2020.
By Ryan Fonseca, THE SAN FRANCISCO STANDARD
https://sfstandard.com/2025/09/26/pg-e-ai-boom-data-centers-ratepayer-impacts
As the artificial intelligence industry grows, so does its insatiable demand for energy.
That’s good news for the U.S. energy sector, including Pacific Gas & Electric Company. But is it bad news for the utility’s customers, who must compete with data centers for finite stores of energy?
PG&E claims, somewhat counterintuitively, that the skyrocketing energy demands of AI companies is actually a gift to ratepayers. In July, the utility reported that its data-center demand pipeline had nearly doubled,from 5.5 gigawatts in February to 10 gigawatts. PG&E plans to open 18 new data centers in the Bay Area by 2030.
“We’re living through one of the most historic periods of load growth in recent memory,” said PG&E spokesperson Paul Doherty, adding that the last time demand for electricity was this high was the post-WWII boom. Doherty said that wild data-center growth creates “the opportunity to help reduce rates overall for all customers.”
That would be welcome news for ratepayers — if true. And there’s little reason for customers to believe the hype. The utility’s rates have blown up 41% over the last three years and 70% since 2020. PG&E says those increases have offset losses from solar power and investments in grid hardening against wildfire risk. But at the same time, the utility has posted record profits for the last two years.
Doherty wrote in June that protecting customers from further rate increases related to the growth of data centers “is a top priority.”
“PG&E estimates that for every gigawatt from data centers, under the right circumstances, customer bills could drop by 1%-2% over time,” he added.
That “under the right circumstances” stood out to Jamie Court, president of Consumer Watchdog. He called it “the biggest hedge I’ve ever heard,” adding: “PG&E doesn’t usually hedge — they usually just lie.”
Court worries that California’s data-center “gold rush” would actually come at the expense of ratepayers.
“We do not have a good sense of how consumers are paying for the infrastructure for these AI data centers and whether it’s a reasonable split or not,” he said.
A bill awaiting Gov. Newsom’s signature seeks to protect ordinary ratepayers from the data-center boom by requiring state regulators to establish special tariffs for large electricity users.
But state officials will also need to “hold a firm line” and protect the grid, said Severin Borenstein, faculty director of the Energy Institute at UC Berkeley’s Haas School of Business. More data centers will push up peak demand, which could drive PG&E and other utilities to invest more in infrastructure to ease the added strain, he explained. That could end up hitting everyday ratepayers’ bills.
One possible solution: getting data centers to reduce their power consumption during peak hours. Borenstein said he’s “not highly confident” that tech companies will do so willingly but noted that regulators are well aware of the risks and grid challenges and have the power to set dietary restrictions on the power-hungry industry.
“This actually could be good for ratepayers if handled well,” he said. “But it is a risky situation.”
