Big Tech Gets Big Discounts in Indiana
Data Centers Socialize the Costs, Privatize the Profits
AES, also known as Indianapolis Power & Light Company, submitted a rate review request to the Indiana Utility Regulatory Commission (IURC). Regulated by the government, utility companies are not able to raise rates on their own, they have to be granted permission to do so by the regulatory body.
According to AES, they need to increase rates for the roughly 500,000 customers they serve in and around the Indianapolis area because of rising supply costs, aging infrastructure, and a desire to be more sustainable. The real reason? Data centers.
Utility operators are salivating at the revenue potential data centers present. Google, Microsoft, Meta, and Amazon are building data centers in states like Indiana with our available land and ridiculously generous incentive packages. At the state level, these tech behemoths are offered a nearly 100% tax discount for 5o years. Additional discounts are available at the local level for in the form of reductions in property and other local taxes. To sweeten the pot even further, utility companies offer discounted rates so the data center will locate in their territory.
The loss of tax revenue a company like Amazon should be contributing to Indiana is infuriating enough, but of course, it gets worse.
Utility companies put all of the financial responsibility to increase their capacity for a new data center on their existing customers. They jack up the bills of regular rate payers to upgrade their infrastructure. Once the data center is up and running and generating extraordinary revenue for the utilities, will the bills of the regular utility customers who bankrolled this project go down? Of course not.
Socialize the costs. Privatize the profits.
The Harvard Electricity Law Initiative released a paper earlier this year called Extracting Profits from the Public: How Utility Ratepayers are Paying for Big Tech’s Power. They studied 50 rate increase proposals submitted to utility regulatory bodies to prepare for an incoming data center.
The researchers also explore the question of whether utility regulators should be the ones in chare with awarding huge subsidies to these tech giants. When it comes to data centers, regulatory bodies like IURC are not setting utility rates, they’re actually approving subsidies to massively wealthy companies.
The timing of the AES request to the IURC makes sense. In March, a law firm submitted a rezoning request on behalf of an “unknown entity” so a data center can be developed in Indianapolis’ Franklin Township, inside AES’ electric service area.
Local officials, regardless of political party, feel forced to welcome these data centers into their communities because of the exaggerated promise of jobs. The reality, however, is that most jobs are only there for the construction phase, then they leave. These communities are left with higher utility bills and a massive industrial building, disrupting the natural environment and using an extraordinary amount of resources.
It is unconscionable that corporations worth billions of dollars are not forced to fund their own endeavors. These titans of capitalism sure seem to love socialism too so long as they are never asked to socialize their profits.
The IURC is taking public comment on AES’ request to raise rates.
Click here to submit your comment. Also, bookmark that webpage to be aware of future public meetings on this case.