How Missouri communities can prevent data centers from raising utility bills
This opinion piece discusses how Missouri communities can manage data center growth to prevent increased utility bills for residents. It suggests implementing private electricity grids and resisting large tax incentives as strategies to ensure data centers benefit the state without burdening ratepayers. The article highlights the significant electricity and water demands of data centers and proposes policy changes to address these challenges.
The Kansas City Star published an opinion piece by Avery Frank, a senior policy analyst at the Show-Me Institute, outlining strategies for Missouri communities to manage data center development without escalating utility bills for residents. Frank acknowledges the substantial tax revenue benefits data centers can bring, citing Loudoun County, Virginia, where data centers contribute nearly half of property tax revenues. However, he warns about the significant infrastructure strain and costs, noting that a single 100-megawatt data center can consume electricity equivalent to 80,000 households and water equal to 2,600 households. Hyperscale facilities can draw even more power, comparable to a nuclear energy center.
Frank highlights that while Missouri has implemented measures requiring large data centers to cover grid connection costs, utility companies like Ameren and Evergy indicate that expanding the grid for these facilities could still lead to rate increases for all customers. He proposes "consumer regulated electricity" (CRE) or private electricity grids as a promising state-level solution, which would allow large-scale energy consumers to work directly with energy producers, thereby alleviating pressure on government and potentially protecting ratepayers. New Hampshire has already adopted CRE, and the U.S. Congress is considering a federal policy. Similar solutions are suggested for water usage.
Locally, Frank advises communities to resist offering generous tax incentives to attract data centers, arguing that the primary local benefit of these facilities is tax revenue, as they create few long-term jobs or secondary development. He contends that communities with reliable electricity, sufficient water, and advantageous locations are already attractive to developers, and reforms like CRE could enhance Missouri's competitiveness while shifting risks to investors rather than ratepayers. Frank concludes that a patient approach, focusing on broad tax cuts from data center revenues and removing development barriers, would transform data centers into a genuine opportunity for Missouri.