The deal we made about power no longer works

For a century, we shared the cost of the electric grid, and it was fair. When a factory arrived and needed new power, the community helped fund the infrastructure, because that factory brought hundreds of jobs and decades of economic activity. We paid together, and we benefited together. That rough proportionality was the bargain.

Artificial intelligence data centers strain it.

The AI facility proposed in Palm Beach County, Project Tango, was designed to draw about 600 megawatts of power, according to project manager Ernie Cox. Tallahassee, a city of roughly 200,000, set its all-time peak at 633 megawatts in 2010. When one customer can use as much as a capital city uses on its heaviest day, the old bargain stops working. Florida law recognizes the scale. SB 484 sets its threshold at 50 megawatts. Project Tango wanted twelve times that.

Most states without a law like SB 484 spread the cost of grid upgrades across every household. That arithmetic assumed no single customer would trigger billions in new investment, and that customers would stay. A factory is held in place by its own weight. A data center is held in place by a contract, and contracts have renewal dates.

This is not an argument against data centers. It is an argument for updating a bargain that no longer fits the math. Before your community approves one, get five questions answered.

One. Does the data center pay for the power it demands? If the rules make the facility cover the cost of the capacity its demand triggers, residents are protected. If that cost gets spread across everyone, households pay for power they never used. Florida wrote this principle into law this year. SB 484 requires utilities to file new pricing rules with the Public Service Commission by October 1. But filing is not protection. The Commission approves most of what utilities put before it, and the rules that emerge in October will most likely be the ones utilities proposed. Read them.

Two. Who reviews the price the utility pays its corporate sibling? A utility does not always generate the power it sells. The company that bills customers and the company that generates it are sometimes sister companies under a single parent, and the price between them is set within the corporate family. Federal regulators have rules for those transactions at the wholesale level. Florida’s new law reviews what the customer pays at the end. The gap between them is where a community should ask questions, because that is the part no single regulator sees whole.

Three. Does the company pay even if it does not use everything it asked for? This is called take-or-pay, and it obligates a large customer to pay for the infrastructure built to serve it whether or not it uses all of it. It is negotiable, and it can be negotiated down. In the Florida Power and Light rate settlement approved last November, Docket 20250011-EI, that figure fell from 90% to 70% during negotiations. The data center industry’s own trade association had objected to the 90% requirement in its filings. The Office of Public Counsel did not sign the settlement. Ask what the number is in your deal, and who can approve lowering it.

Four. What happens if the data center leaves? The cost is set by the load on the day the deal is signed. The infrastructure lasts thirty to forty years. If a utility builds for a customer that later shrinks or relocates, the equipment stays, and its cost gets spread across everyone who remains. This is not a prediction that any project will leave. It is a question about who carries the risk if one does, and right now the default answer in most states is you.

Five. What conditions is the county attaching before it approves? State law sets the cost rules, but land use stays local. A county can require a project to fund its own grid and road upgrades and commit to enforceable terms before the vote. The strongest position is not a flat yes-or-no. It is a yes, with conditions.

Palm Beach County Commissioners denied the Project Tango expansion on July 15 without prejudice. The developer can return, and it retains an older approval to build a two-million-square-foot facility on the site. The vote settled where a project can go. It did not settle who pays for the power it would need, because that decision belongs to the Public Service Commission and the filings are due October 1.

Florida is first, with a binding law and a deadline this Fall. These projects are moving into communities in nearly every state, and most officials are voting on them without asking who pays. The facility is not the risk. Approving it without answers is.

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Dr. Mark McNees is Director of the Jim Moran College of Entrepreneurship at Florida State University.