R Street Testimony in Support of Georgia SB 34, “Public Service Commission; costs incurred by an electric utility as a result of providing electric services to commercial data centers from being included in any rates; prohibit”
Testimony from:
Marc Hyden, Director, State Government Affairs, R Street Institute
In SUPPORT of SB 34, “Public Service Commission; costs incurred by an electric utility as a result of providing electric services to commercial data centers from being included in any rates; prohibit”
February 20, 2025
Senate Regulated Industries Committee
Chairman Cowsert and members of the committee:
My name is Marc Hyden. I am a Georgia resident and the director of state government affairs for the R Street Institute, which is a nonprofit, nonpartisan public policy research organization. Our mission is to engage in policy research and outreach to promote free markets and limited, effective government in many areas, including those at the nexus of good governance and energy reform. That is why we have special interest in SB 34.
The Georgia General Assembly has worked hard to make Georgia the best state for business for more than 10 years running, and one of the industries that’s thriving here is data centers. New data centers are popping up across the state, and many billions of dollars’ worth of data center investments have been poured into Georgia. This is great for business and great for our economy, but it comes with risks because data centers draw an inordinate amount of energy from our limited resources. As energy demand increases, electricity costs may too increase for captive ratepayers.
The problem facing us is that Georgia is an electric monopoly state. Electric customers here have no choice whatsoever over their electric provider. There is no competition among electricity providers and consumers are unable to choose which provider they would like support. “Since 2023, the average Georgia Power residential [customer] is paying $43 more per month following a series of [increases] to base electric rates, to recover excess fuel expenses, and complete two of the newest nuclear power generators at Plant Vogtle,” reports the Georgia Recorder. Put simply, electric providers can charge whatever they want—so long as the Public Service Commission approves the prices—and customers are forced to pay it or go without electricity.
This is an outdated and problematic approach, and so long as this remains Georgia’s policy, electric monopolies must be regulated fairly and effectively. While the Public Service Commission is the primary regulator, sometimes the Georgia General Assembly needs to assert itself and institute commonsense regulations. That is what SB 34 aims to do.
This measure simply states that data centers must pay for the costs incurred to serve them, and that those costs cannot be passed onto a pool of captive ratepayers like you and me. This is a small tweak that ensures that the cost of electricity is more fairly distributed based on use. I understand why data centers are the target. Some of them require a massive amount of electricity equivalent to the needs of a small city, but this should apply to all industries—data centers or otherwise. They should all pay for the resources they use and not pass them onto captive ratepayers who have nothing to do with their energy consumption.
However, the best approach would be to allow new large customers to choose competitive electricity supply so that Georgia Power is not responsible for planning all new electricity generation. Under that paradigm, there would not be a concern about how Georgia Power allocates the cost of new generation, because they wouldn’t be the ones owning it. Instead, new customers would directly contract with other companies for their supply, ensuring they incur the entire cost of their energy demands.
In the end, SB 34 is a step in the right direction, and I encourage the committee to support the measure.
Thank you,
Marc Hyden
Director, State Government Affairs
R Street Institute
(404) 918-2731
mhyden@rstreet.org