Gov. Tate Reeves has proudly announced a second huge data center to be located in Brandon.
The project, sponsored by a private Connecticut-based company called Avaio Digital, claims to be six billion dollars in investment.
Unlike the $16-billion Amazon Data Center project, there was no two-day special session for the Avaio project. It will probably not be regulated by Senate Bill 2001, which controls the Amazon project.
If so, this is good news and will allow the Public Service Commission to fully review, monitor and regulate the extent to which the project’s cost can be assessed to residential energy bills.
Like the Madison Amazon plant, the Avaio project will buy its electricity from Entergy Mississippi. Let’s hope their rate won’t be deemed a “trade secret” like the Amazon data center rate was deemed by SB 2001.
Data centers are not like any other industrial project ever to come to Mississippi. First of all, they are largely automated and don’t create many jobs. The Avaio project is projected to create no more than 60 direct jobs. Second, data centers consume an almost unbelievable amount of electricity.
How much electricity? I asked my favorite AI app, Perplexity.
“At full buildout, the Avaio Digital Taurus data center is expected to use 450MW of electricity. The average load of the Entergy Mississippi grid is approximately 1,471MW (based on their 2023 retail electricity sales). This means that the Avaio data center alone would account for about 30.6% of Entergy Mississippi’s average system load—a substantial portion for a single facility.
“The Amazon AWS data center complex in Madison County, Mississippi, is expected to consume up to 1,300MW of electricity once fully completed. Given that the average load on the Entergy Mississippi grid is approximately 1,471MW, Amazon’s data center would use about 88.4% of the current average grid load—making it nearly as large as all other current customers combined and dramatically exceeding the proportion of Avaio’s planned 30.6%”
So combined, the two data centers will consume 19 percent more electricity than every customer, business and industry on the Entergy Mississippi grid in 2023.
Typically, industrial users pay half the rate of residential customers, which means existing users will have to make up at least 50 percent of the extra cost of the electricity. My guess is these data centers are getting a much lower rate than the typical low-usage plain-vanilla manufacturing plant. That’s probably why the rates are not being revealed to the public.
A reasonable guess would be the data centers will pay 25 percent of the residential rate, which means existing customers, including the average Mississippi family, will have to pay for the remaining 75 percent.
Entergy Mississippi says the Amazon data center will require a $3 billion investment to supply the data center with electricity. Add at least another billion for the Avaio project. Now we’re looking at $4 billion cost in new Entergy power plants.
Entergy Mississippi will have to issue bonds to build the $4 billion in new electricity generating plants. The company borrows money at a six percent rate. That’s $240 million in interest alone that will be passed on to ratepayers.
Add to the $240 million in bond interest, the 10 percent guaranteed return on the $4 billion investment. That’s another $400 million a year. Add them together, that’s $640 million dollars a year in interest and guaranteed return on equity.
Since the data centers are paying only an estimated 25 percent of the rate residential customers pay, that means 75 percent of this cost will be on the shoulders of the ratepayers. That’s $480 million a year over the next several decades.
That amount would be divided by Entergy Mississippi’s existing 459,000 customers. If you divide $480 million a year by 459,000 that comes to $1,045 per customer, or $87 per month.
So before you get too excited about the 1,060 data center jobs, most of which will be filled by non Mississippians, ponder paying an extra $87 a month for your electric bill.
ChatGPT estimates the average disposable income of an average Mississippi family, after paying for essentials, to be $1,820 a month. So the $87 will represent a 4.7 percent decline in their after-essentials discretionary income.
And then there are the 19 percent of Mississippi families living in poverty. They have no after-essential discretionary income. That $89 extra for electricity will take food and medicine out of the mouths of babes and elderly so Amazon and Entergy stockholders can watch their portfolios skyrocket.
It’s not just Entergy Mississippi. In Meridian, Mississippi Power is planning a $10 billion data center.
There is a right way to fund data centers. It’s called Behind The Meter (BTM). That’s where data centers have to build their own electricity generating plants instead of forcing everybody else to pay for it. That's what Elon Musk is doing with his $19 billion data center in Memphis. Good for him. Good for Tennessee. Bad for Mississippi.
Nationwide, there is an uproar about what’s going on: the richest companies in the world are forcing average American families to make them richer.
Here in Mississippi, consumers have only two advocates, Bigger Pie Foundation and Emmerich Newspapers.
Our goal is transparency and education. We hope if the public understands what’s going on, there may still be a way to stop this injustice.
