Is it worthwhile courting data centres?

It’s already clear that data centres for artificial intelligence are electricity and water hogs.

But their almost unstoppable spread makes you wonder whether we realize how big a toll we’re preparing to take to power our AI-generated future.

Americans are the canaries in the data-centre coal mine, seeing electrical rates shoot up as demand outstrips installed capacity and having watched water quality and water system pressures drop as the cooling needs of the centres overrun the ability of municipal systems to supply water.

And a story developing in Lake Tahoe is showing just how cutthroat the battle between big-money data centres and homeowners can be. (Keep in mind, under the Canadian system of public utilities regulation, this is far less of a fear in most Canadian provinces, including Manitoba. But it shows how, with duelling demands, there can be big winners and big losers.)

Lake Tahoe is a resort town with about 49,000 permanent residents — and, in May of 2027, it’s going to face a critical shortage of electricity.

The town’s electric utility, Liberty Utilities, gets 75 per cent of its power from NV Energy, a Nevada energy supplier. But NV Energy just told Liberty it won’t be supplying that electricity as of next May.

Why? Because data centres being built by Apple, Google and Microsoft in the Tahoe/Reno Industrial Centre east of Reno want the power instead.

Lake Tahoe’s alternative source of power? Well, right now there isn’t one. The power could come from other western utilities, though the battle for power is extreme — NV Energy says it has been approached by customers looking for 22,000 megawatts of potential load, 150 times more than Lake Tahoe uses annually.

Lake Tahoe is certainly an outlier.

But it also shows what happens when the big money comes to town.

The daily news is dotted with stories about data centre problems — across the United States, the increased demand for power by data centres has driven power rates up by a year-over-year average of 9.5 per cent in the U.S. The average price per kilowatt hour in the U.S. is now 17.45 cents — equivalent to 23.95 cents in Canadian dollars. The national average rate in Canada is between 15 and 17 cents per kilowatt hour, with Manitoba’s residential customers paying 9.97 cents per kilowatt hour.

But power costs are only part of the problem: data centres also consume massive amounts of municipal water for cooling purposes. This week, a water utility in Fayette County, Ga., admitted it had discovered that a massive data centre had two industrial-scale connections to the area’s water system that the utility was completely unaware of — while other customers were being told to conserve water due to drought, the data centre connections used over 30 million gallons of water it wasn’t charged for.

Often, data centres are going into regions that already have water shortages and ever-bigger centres create ever-bigger challenges. A proposed 40,000 acre data centre in Utah will use more power than the state uses as a whole right now. Its proponents claim it won’t affect power rates because it will generate the nine gigawatts of power it will use by building and running its own massive natural gas generators.

And that’s a whole new problem: emissions from natural gas consumption, along with huge amounts of waste heat.

It’s like a kind of frenzied AI construction boom that outstrips fiscal logic.

Think about it: increasing corporate profits by laying off workers and replacing them with AI, but in the process, increasing everyone’s costs, harming our collective health and removing incomes by laying off potential customers.

Does any of this make economic sense?