Local opposition has blocked or delayed more than a dozen huge data center projects around the country. But these Californians don\u2019t get a vote on Nevada projects that could affect their electricity supply. <\/p>\n
Those big data centers being built for artificial intelligence firms are in bad odor nationwide. <\/p>\n
Seven in 10 Americans oppose projects in their local communities, according to a recent Gallup poll<\/a>. More than a dozen, valued at some $64 billion<\/a>, have been blocked or delayed by local opposition in recent years. <\/p>\n But what happens when the people directly affected by these project plans don\u2019t get a vote?<\/p>\n Data centers did not influence this decision.<\/p>\n \u2014 NV Energy, explaining its move to end service to 49,000 California customers. But is it telling the truth?<\/p>\n That\u2019s the quandary faced by 49,000 residents living on the California side of Lake Tahoe, mostly in the city of South Lake Tahoe. The surge in construction of data centers in Nevada is prompting the Nevada utility that supplies 75% of the Californians\u2019 electricity to cut them off next year.<\/p>\n The California-regulated utility that carries the electricity over the state line to their homes and businesses has assured them that it will find alternative sources to protect them from losing service \u2014 but hasn\u2019t promised that their rates won\u2019t increase because of the transition.<\/p>\n Get the latest from Michael Hiltzik <\/p>\n Commentary on economics and more from a Pulitzer Prize winner.<\/p>\n By continuing, you agree to our Terms of Service<\/a>, which include arbitration and a class action waiver. You agree that we and our third-party vendors may collect and use your information, including through cookies, pixels and similar technologies, for the purposes set forth in our Privacy Policy<\/a> such as personalizing your experience and ads. <\/p>\n \u201cIt\u2019s like we don\u2019t exist,\u201d Danielle Hughes, the head of a local energy nonprofit and an advocate for the customers, told me. The crisis facing those residents is just the latest in a long line of indignities they have suffered thanks to several unique characteristics of their energy market, Hughes says. <\/p>\n For one thing, they are permanent residents of the community \u2014 teachers, firefighters, police, and service workers at the hotels, restaurants and resorts that bring in a tidal wave of visitors every winter. The latter, as well as vacation-home owners and renters, generate seasonal electricity demands that drive up power costs year-round. <\/p>\n That means that the permanent residents are in effect subsizing the visitors, even though they\u2019re lower-income ratepayers than the generally well-heeled vacationers.<\/p>\n Before delving deeper into the issues for the permanent residents, let\u2019s examine the effect of the large-scale data centers being built and proposed in Nevada, and more generally coast to coast.<\/p>\n Nevada has emerged as a prime location for data centers, in part due to the wide open, undeveloped acreage available for construction. More than 60 data centers have sprung up around Reno and Las Vegas, with many more slated to rise in the northern part of the state, according to a survey by the Desert Research Institute<\/a>, a Nevada nonprofit. <\/p>\n \u201cWe\u2019re right at the epicenter for global expansion\u201d of data centers, observed Sean McKenna, a co-author of the report. <\/p>\n The existing data centers consumed 22% of Nevada\u2019s electric generating capacity in 2024, DRI calculated. If all those under construction and on the drawing board are completed, that figure would rise to 35% by 2030. NV Energy, the Nevada utility that provides the electricity for the California side of Lake Tahoe, estimates that the electricity demand for just the 12 projects being planned would come to 5,900 megawatts \u2014 nearly three times the generating capacity of Hoover Dam.<\/p>\n That construction frenzy is likely to bring some of the same drawbacks that have provoked local communities to militate against data centers \u2014 not only pressure on existing electricity capacity, but also a voracious appetite for water due to the cooling needs of the computerized equipment managing the data for AI applications. Residents in the neighborhoods of data centers have also complained of incessant noise coming from their 24\/7 operations.<\/p>\n With global warming driving up temperatures in Nevada\u2019s semiarid and desert zones, they add, residents will find themselves in a contest with data center owners for an already inadequate supply of power in the state. DRI warns: \u201cLocal utilities and ratepayers in data center cluster regions like Northern Nevada also risk bearing the costs of subsidizing AI and computing services as power grids expand their infrastructure.\u201d<\/p>\n In many communities, the result has been a vigorous and vocal backlash, including in California<\/a>. They\u2019ve packed town halls, prompted state and local political leaders to legislate limits on their growth or even to ban them.<\/p>\n That brings us back to the situation around Lake Tahoe.<\/p>\n In terms of its electric utility service, the region has long been an outlier. About 25% of its power comes from two solar farms operated by Liberty Utilities, but the rest comes from NV Energy; the reason is that it\u2019s unconnected with the California transmission grid but accessible via a line from Nevada. <\/p>\n As a result, it falls into the cracks among energy regulators. Because it\u2019s not part of the California grid, the California Public Utilities Commission has only limited jurisdiction over its service, although it has the authority to approve its electricity rates. The Nevada Public Utilities Commission doesn\u2019t oversee the customers\u2019 service at all, because they\u2019re not Nevada residents. <\/p>\n The region is also unusual because its peak energy demand comes in the winter; most of the rest of California peaks in the summer, when air conditioners are on full blast. <\/p>\n Hughes and other residents have maintained that because the CPUC hasn\u2019t modeled electricity demand for their small region, they have been paying for infrastructure that doesn\u2019t serve them. <\/p>\n \u201cWe\u2019ve been paying for assets in Nevada,\u201d Hughes says, \u201cwithout it being tracked by the state of California.\u201d<\/p>\n Liberty does charge permanent residents in the Tahoe area about 2% less than the rate for part-time residents, but the discount should be much larger, Hughes says. Liberty didn\u2019t respond to my request for comment.<\/p>\n Earlier this year, NV Energy informed Liberty that it would no longer serve as its wholesale energy provider after mid-May next year, and urged Liberty to make haste to secure an alternate supplier. <\/p>\n Liberty promised its customers in a recent statement<\/a> that they \u201cwill not be left without service\u201d as a result of the change. \u201cThis does not mean the power is shutting off,\u201d Eric Schwarzrock, president of Liberty Utilities, said at a South Lake Tahoe City Council meeting last month, according to the news site SFGate<\/a>. \u201cEnergy companies, utilities, large customers change energy supply frequently.\u201d <\/p>\n Liberty and NV Energy both attributed the change to a preexisting agreement that anticipated that NV Energy would eventually cease providing power to Liberty\u2019s customers, although their interpretations of the deal and the impetus for the change appear to be at odds.<\/p>\n The \u201clong-standing agreements and planning assumptions … date back more than a decade,\u201d NV Energy said in a May 14 statement<\/a>. That was \u201cwell before data center growth became a factor,\u201d the utility said. \u201cData centers did not influence this decision.\u201d<\/p>\n