Sen. Bernie Sanders, I-Vt., and Rep. Alexandria Ocasio-Cortez, D-N.Y., teamed up on a proposed moratorium on data centers. The measure would “enact a reasonable pause” in the development of such facilities. Ocasio-Cortez said in an announcement on the bill that AI poses an “existential harm” to our society. The two lawmakers demand that “billionaire Big Tech oligarchs” not be allowed to harm health and safety, that AI should be developed for the benefit of workers and not the wealthy, and that data centers should not impact electricity costs. 

The first two points tie socialist ideals to topical concerns, which was the same strategy the pair used to advance the 2019 Green New Deal that sought to address climate change with a host of progressive measures and ultimately failed. 

The concern about electricity rates, however, is shared by a much broader slice of American society on both sides of the political spectrum. Many states, such as Georgia and Florida, are considering legislation to prevent the growth of data centers from increasing electricity rates. Local communities are also blocking data centers for a host of concerns, but electricity rates are a big one. 

The Institute for Energy Research (IER) published a study recently that analyzed the relationship between the number of data centers in a state and electricity rates in those states. The study found no statistically significant correlation between the number of data centers and high energy costs. 

Analysis asks three questions

Daniel Simmons, IER fellow and former assistant secretary for the Department of Energy, told Just the News that in performing the analysis, they were trying to answer three questions. The study’s first question looked for a statistically significant correlation between data centers and electricity rates, and it found none. 

The second question asked if data centers over time were leading to faster electricity-rate increases. On that question, the study also found no statistically significant correlation between the two. The last question looked at the fact that data centers are increasing demand for electricity. Is that increased demand, the study asked, the reason we’re seeing higher electricity rates around the country? 

“The answer there is maybe the most interesting, because the correlation runs the exact opposite way,” Simmons said. 

The study found that between 2015 and 2025, states with high growth in electricity demand averaged a 20% increase in electricity rates, whereas states with low growth in electricity demand averaged nearly 40% increases in electricity rates in the same period. 

The study also ran the same analysis for the years 2021-2025 and found that high-growth states had an average increase of 16%, and low-growth states saw an average increase of 28.5%. 

Spreading out fixed costs

While that may seem counterintuitive, it has to do with the primary cost of providing electricity. Electricity production is actually quite cheap. Most of the costs associated with electricity are the costs to finance, build and maintain power plants and transmission lines. When sales grow, the IER study explains, these fixed costs are spread out across more kilowatt-hours, a measurement of electricity consumed. This holds per-unit rates down. 

When sales stagnate or drop, the fixed costs are still there, but they’re covered by a shrinking base of ratepayers, which puts upward pressure on rates, according to the study.  

The states with the largest decline in sales are California, Maine, Connecticut, Massachusetts and Hawaii, and ratepayers in these states pay the highest rates in the U.S. 

“California is in a tough place. They put themselves in a tough place,” Simmons said. 

Ratepayers in states with the highest increases, on the other hand, enjoy low rates. They are North Dakota, New Mexico, Oregon and Virginia. Texas and Virginia are also home to some of the largest growth in data centers. 

More than just AI 

Simmons said that this study is looking at past data and analyzing correlations between electricity rates and data centers. That means it’s possible that the situation could change in the future. “This is just saying what things are like right now. For people now to point to data centers and say that they are the cause of high electricity rates, that is just completely and utterly wrong,” Simmons said. 

The opposition to data centers is also viewing their growth as solely in support of artificial intelligence. Data centers are handling the processing of large language models that are giving birth to AI, but Simmons points out that that’s not all they’re doing. 

“Let's not throw the baby out with the bath water" expert says

“I just received some emails. That's all in data centers. When you take pictures on your phones, those pictures get uploaded to data centers,” Simmons said. 

Virtually all online activity, which includes communications and online shopping, requires data centers. Unfortunately, the war on data centers, which is driven largely by a belief they drive higher electricity rates, is also making it harder for these other uses to grow. 

“Let's not throw the baby out with the bath water, in terms of AI or  other types of data centers, because they help us with a whole lot of stuff that we really like,” Simmons said.