As electricity demand from data centers continues to surge, a persistent question has dogged the industry: Are residential ratepayers footing the bill for massive tech infrastructure? According to Amazon Web Services (AWS) and an independent study it commissioned, the answer is a definitive no.
As a guest on The POWER Podcast, Mandy Ulrich, senior manager of energy and water for Americas East at AWS, outlined the company’s energy strategy and discussed findings from a study by Energy and Environmental Economics Inc. (E3) that examined how Amazon data centers impact local power systems.
Study Finds Data Centers Generate Surplus Revenue
The E3 study evaluated Amazon data centers across a diverse set of utility territories, including large investor-owned utilities such as Pacific Gas and Electric (PG&E) and Dominion Energy, mid-size utilities like Entergy, and cooperatives such as Umatilla Electric Cooperative in the Pacific Northwest.
“The simple answer is that Amazon data centers are not being subsidized by other utility customers,” Ulrich said. The study projects that Amazon’s data centers will generate $33,500/MW of surplus value in 2025, increasing to $60,650/MW by 2030.
For a typical 100-MW Amazon data center, that translates to $3.4 million in surplus revenues in 2025 and approximately $6.1 million by 2030. These surplus funds—revenues above the utility’s regulated rate of return—can be used by utilities to modernize grid infrastructure, improving reliability for all customers.
Grid Investment Benefits All Customers
The study found that Amazon data centers are driving investments in grid infrastructure that support not just their own operations but also local residential and commercial growth. Ulrich pointed to Entergy Mississippi as a prime example, where the utility is using investments from Amazon and other large customers to fund a $300 million “Superpower Mississippi” grid reliability campaign—at no cost to residential customers—targeting a 50% reduction in outages within five years.
Innovative Rate Structures Prevent Cost-Shifting
While the E3 study validates that existing rate policies have been effective in preventing cross-subsidization, Ulrich emphasized that AWS continues to work with utilities on innovative approaches to ensure large industrial customers pay their fair share.
She highlighted a Northern Indiana Public Service Co. (NIPSCO) project as a “groundbreaking model.” Under this first-of-its-kind agreement, Amazon is investing in 3 GW of electrical capacity, with 2.4 GW dedicated to data center operations and 600 MW reserved specifically to support grid reliability for all NIPSCO customers.
The structure creates a separate generation company (GenCo) that operates under a “commercial contract term,” Ulrich explained. By operating as a separate entity, GenCo isolates the cost of new growth to data centers. “The data center companies that drive new demand for electricity will fund the generation and transmission infrastructure they require, ensuring that regular customers don’t shoulder those costs, even if the customer leaves before contract completion,” NIPSCO said in a Nov. 24 press release.
“NIPSCO’s existing customers will have no financial responsibility for powering Amazon data centers,” Ulrich said. NIPSCO said, “This structure is expected to provide value to customers by generating approximately $1 billion in cost savings that will be returned to current NIPSCO customers as credits on monthly electric bills over the project’s 15-year duration.”
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As electricity demand from data centers continues to surge, a persistent question has dogged the industry: Are residential ratepayers footing the bill for massive tech infrastructure? According to Amazon Web Services (AWS) and an independent study it commissioned, the answer is a definitive no.
As a guest on The POWER Podcast, Mandy Ulrich, senior manager of energy and water for Americas East at AWS, outlined the company’s energy strategy and discussed findings from a study by Energy and Environmental Economics Inc. (E3) that examined how Amazon data centers impact local power systems.
Study Finds Data Centers Generate Surplus Revenue
The E3 study evaluated Amazon data centers across a diverse set of utility territories, including large investor-owned utilities such as Pacific Gas and Electric (PG&E) and Dominion Energy, mid-size utilities like Entergy, and cooperatives such as Umatilla Electric Cooperative in the Pacific Northwest.
“The simple answer is that Amazon data centers are not being subsidized by other utility customers,” Ulrich said. The study projects that Amazon’s data centers will generate $33,500/MW of surplus value in 2025, increasing to $60,650/MW by 2030.
For a typical 100-MW Amazon data center, that translates to $3.4 million in surplus revenues in 2025 and approximately $6.1 million by 2030. These surplus funds—revenues above the utility’s regulated rate of return—can be used by utilities to modernize grid infrastructure, improving reliability for all customers.
Grid Investment Benefits All Customers
The study found that Amazon data centers are driving investments in grid infrastructure that support not just their own operations but also local residential and commercial growth. Ulrich pointed to Entergy Mississippi as a prime example, where the utility is using investments from Amazon and other large customers to fund a $300 million “Superpower Mississippi” grid reliability campaign—at no cost to residential customers—targeting a 50% reduction in outages within five years.
Innovative Rate Structures Prevent Cost-Shifting
While the E3 study validates that existing rate policies have been effective in preventing cross-subsidization, Ulrich emphasized that AWS continues to work with utilities on innovative approaches to ensure large industrial customers pay their fair share.
She highlighted a Northern Indiana Public Service Co. (NIPSCO) project as a “groundbreaking model.” Under this first-of-its-kind agreement, Amazon is investing in 3 GW of electrical capacity, with 2.4 GW dedicated to data center operations and 600 MW reserved specifically to support grid reliability for all NIPSCO customers.
The structure creates a separate generation company (GenCo) that operates under a “commercial contract term,” Ulrich explained. By operating as a separate entity, GenCo isolates the cost of new growth to data centers. “The data center companies that drive new demand for electricity will fund the generation and transmission infrastructure they require, ensuring that regular customers don’t shoulder those costs, even if the customer leaves before contract completion,” NIPSCO said in a Nov. 24 press release.
“NIPSCO’s existing customers will have no financial responsibility for powering Amazon data centers,” Ulrich said. NIPSCO said, “This structure is expected to provide value to customers by generating approximately $1 billion in cost savings that will be returned to current NIPSCO customers as credits on monthly electric bills over the project’s 15-year duration.”
195. Power Grid Security in the AI Era: Why Energy Dominance and Cybersecurity Can’t Be Separated
The POWER Podcast
35 minutes 2 seconds
5 months ago
195. Power Grid Security in the AI Era: Why Energy Dominance and Cybersecurity Can’t Be Separated
In a special edition of The POWER Podcast, released in collaboration with the McCrary Institute’s Cyber Focus podcast, POWER’s executive editor, Aaron Larson, and Frank Cilluffo, director of the McCrary Institute for Cyber and Critical Infrastructure Security and Professor of Practice at Auburn University, discuss the evolving power grid and cybersecurity challenges.
Specifically, they highlight the shift taking place from centralized power stations to more distributed energy resources, including solar farms and wind turbines. The conversation touches on the importance of a reliable power grid and the need to protect critical infrastructure.
“From a national security standpoint, from an economic standpoint, from a public safety standpoint, if you don’t have power, all these other systems are somewhat irrelevant,” Cilluffo said. “There’s no infrastructure more critical than power.”
Cilluffo noted that artificial intelligence (AI) is requiring increasingly more power, which can’t be ignored. “If we want to be AI dominant, we can’t do that if we’re not energy dominant,” said Cilluffo. “The two are in inextricably interwoven—hand in glove. And if you start looking at where the country wants to be technologically, if we want to lead, we really need to continue to double down, triple down, and look at all sorts of sources of energy as well.”
While renewables are clearly leading when it comes to new generation being added to the grid today, emerging technologies including small modular reactors, fusion power, deep dry-rock geothermal, and space-based solar power, are on the horizon, promising potentially game-changing energy options. “And not to put a fine point on it, but you mentioned so many different forms of energy, and I’m reminded of the old test, the A, B, C, or D, all of the above. This sounds like it is clearly an all of the above,” Cilluffo proposed.
Meanwhile, the enormous energy buildout in China was discussed. China is not just leading, but truly dominating the world in the construction of wind, solar, nuclear, coal, and energy storage projects in 2025, both in terms of capacity and projects under development. This leadership is evident across all five sectors, frequently accounting for the majority, or at least a plurality, of new global construction and installation.
“China is a primary focus of a lot of our [Cyber Focus] podcast discussion, but it’s a race we cannot afford to lose, whether it’s around AI, quantum. And, I think you’re spot on; to get there, they recognize the need to really quadruple down on energy,” said Cilluffo. “I still think that we [the U.S.] want to be at the vanguard driving all of this.”
And while it’s widely known that cybersecurity is critically important to energy systems, it’s often not prioritized the way it should be. “Everyone needs to be cyber aware, cyber informed,” Cilluffo said. “These are issues that we have to invest in. It can’t be an afterthought. It has to be something that everyone thinks through. And the reality is, don’t think it’s someone else’s problem: a) it’s all of our problems, and b) don’t think that it can be looked at after the balloon goes up—you need to be thinking all of this well in advance.”
The POWER Podcast
As electricity demand from data centers continues to surge, a persistent question has dogged the industry: Are residential ratepayers footing the bill for massive tech infrastructure? According to Amazon Web Services (AWS) and an independent study it commissioned, the answer is a definitive no.
As a guest on The POWER Podcast, Mandy Ulrich, senior manager of energy and water for Americas East at AWS, outlined the company’s energy strategy and discussed findings from a study by Energy and Environmental Economics Inc. (E3) that examined how Amazon data centers impact local power systems.
Study Finds Data Centers Generate Surplus Revenue
The E3 study evaluated Amazon data centers across a diverse set of utility territories, including large investor-owned utilities such as Pacific Gas and Electric (PG&E) and Dominion Energy, mid-size utilities like Entergy, and cooperatives such as Umatilla Electric Cooperative in the Pacific Northwest.
“The simple answer is that Amazon data centers are not being subsidized by other utility customers,” Ulrich said. The study projects that Amazon’s data centers will generate $33,500/MW of surplus value in 2025, increasing to $60,650/MW by 2030.
For a typical 100-MW Amazon data center, that translates to $3.4 million in surplus revenues in 2025 and approximately $6.1 million by 2030. These surplus funds—revenues above the utility’s regulated rate of return—can be used by utilities to modernize grid infrastructure, improving reliability for all customers.
Grid Investment Benefits All Customers
The study found that Amazon data centers are driving investments in grid infrastructure that support not just their own operations but also local residential and commercial growth. Ulrich pointed to Entergy Mississippi as a prime example, where the utility is using investments from Amazon and other large customers to fund a $300 million “Superpower Mississippi” grid reliability campaign—at no cost to residential customers—targeting a 50% reduction in outages within five years.
Innovative Rate Structures Prevent Cost-Shifting
While the E3 study validates that existing rate policies have been effective in preventing cross-subsidization, Ulrich emphasized that AWS continues to work with utilities on innovative approaches to ensure large industrial customers pay their fair share.
She highlighted a Northern Indiana Public Service Co. (NIPSCO) project as a “groundbreaking model.” Under this first-of-its-kind agreement, Amazon is investing in 3 GW of electrical capacity, with 2.4 GW dedicated to data center operations and 600 MW reserved specifically to support grid reliability for all NIPSCO customers.
The structure creates a separate generation company (GenCo) that operates under a “commercial contract term,” Ulrich explained. By operating as a separate entity, GenCo isolates the cost of new growth to data centers. “The data center companies that drive new demand for electricity will fund the generation and transmission infrastructure they require, ensuring that regular customers don’t shoulder those costs, even if the customer leaves before contract completion,” NIPSCO said in a Nov. 24 press release.
“NIPSCO’s existing customers will have no financial responsibility for powering Amazon data centers,” Ulrich said. NIPSCO said, “This structure is expected to provide value to customers by generating approximately $1 billion in cost savings that will be returned to current NIPSCO customers as credits on monthly electric bills over the project’s 15-year duration.”
