Microsoft says energy prices wont rise near data centers

Microsoft He promised Tuesday that consumers won’t pay more if the software maker builds data centers near their communities.

The company has also committed to replenishing more water than it uses and increasing local tax bases where its data centers are located.

“Our promise to each of these communities is that we will do our part as a company to make sure our data centers don’t drive up your electricity rates,” Brad Smith, Microsoft’s president and vice president, said at an event in Great Falls, Virginia, less than 20 miles from the White House.

Smith said the company will sign agreements with utilities in advance so they can invest in infrastructure that can support the new data centers.

Smith made a similar statement in September in Racine, Wisconsin, near a company data center that will come online in early 2026.

“By collaborating with utilities on plans to increase the electricity supply we need, we will pay utility rates that are high enough to partially offset our electricity costs,” Smith said.

The move comes as prices for services are rising across the US, where tech companies are racing to build data centers capable of running generative AI models like those powering OpenAI’s popular ChatGPT assistant.

Utilities charged U.S. consumers 6% more for electricity in August than a year earlier, including in states where many data centers are located, CNBC reported in November.

These facilities often contain special-purpose processors that require large amounts of energy to operate.

In Caledonia, Wisconsin, where Microsoft plans to build a data center last year, residents had complaints about water and energy use, among other consequences.

The company decided not to move forward with the area it was considering building in the village, citing local feedback.

We Energies, a local utility company in Wisconsin, has proposed a special electricity rate for large customers’ data centers, and Microsoft has asked the state’s Public Service Commission to increase the rate the company pays, Smith said.

“We’re not going to go into a local community and ask them to give local property tax abatements or abatements to attract a data center from Microsoft,” Smith said Tuesday.

On Monday, hours before Microsoft’s event, President Donald Trump said in a post on Truth Social that his administration was working with the company and that it would be “making major changes starting this week to ensure Americans don’t ‘pick up’ their POWER consumption.”

Smith told CNBC’s Eamon Javers that the company has maintained a healthy conversation with the White House since Trump took office last year.

“We really trust their leadership at the federal level and across government, especially Chris Wright and the Department of Energy, Doug Burgum and the Department of the Interior,” Smith told CNBC. Burgum, the Interior Department secretary and former governor of North Dakota, worked as a Microsoft executive for six years after the technology company acquired Great Plains Software in 2001, where he became CEO.

Microsoft CEO Satya Nadella told analysts in October that the company plans to nearly double its data center footprint over the next two years.

Microsoft has been building data centers for over 15 years. In the September quarter, the company spent nearly $35 billion on capital expenditures and leases for cloud and AI infrastructure, up 75% year over year.

“Our goal is to move quickly, partner with local communities, and implement these commitments in the first half of this year,” Smith wrote. blog post.

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