Back in the early 20th century, the advent of electricity was viewed with worry and concern. It was called the “unrestrained demon” with stories of catastrophes awaiting society and warnings that electricity would even disturb sleep. Light switches had warnings not to ignite them with matches. 

Today, a similar sense of uncertainty surrounds artificial intelligence (AI) and the rapid growth of data centers. While the two are inextricably interconnected, they are not the same thing.

AI needs data centers to exist, but data centers do not deal exclusively with AI. Colorado has between 60–80 data centers powering the digital services we use every day, including online banking, streaming services, and even Facebook. Every time we use a credit card at a gas station or order from Amazon, that information passes through a data center somewhere, including facilities located in United Power’s service area. Some of that information uses machine learning and large language models to recognize preferences and make suggestions. 

At United Power, we treat requests for electric service from data centers the same way we manage requests from housing developers or commercial and industrial projects. As part of our obligation to serve, we evaluate each request and determine what infrastructure is needed to deliver reliable power.

Since 2002, United Power’s Board of Directors has operated under a “growth pays” model. Developers of any kind of project are required to pay the up front costs for the equipment necessary to bring power to the site. This protects members from bearing the costs of growth-related infrastructure.

To handle large load requests, United Power has developed the “LIT process” answering three basic questions:

• The location of the desired service, since not all parts of the system can readily accommodate the power needed.
• The investment that will be required by the requesting party.
• The timing of the requested power.

Often, data centers will ask for far more capacity than they need right away, making this careful planning process even more important.

United Power’s load has been growing for 20 years. The benefit of steady growth is that it allows us to spread the kilowatt-hour costs over more members. It also allows us to buy in greater quantities — the more power we purchase, the lower our costs.

There is also an added benefit when the co-op can use member-owned back-up generation for grid stability during times of high demand. United Power is running a pilot program where select large commercial and industrial members allow the cooperative to control their back-up resources in emergency situations. The program is a win-win: participants receive bill credits for offering their back-up resources, and the cooperative receives cost competitive capacity. 

There is no doubt that the rapid growth of data centers across the country is creating challenges for the entire utility industry. Demand for equipment such as gas generators, transformers, and other electrical infrastructure has increased, putting pressure on already constrained supply chains. 

However, electricity is a business requirement for data centers. If utilities are unable or unwilling or to serve them, data center operators will serve themselves. This represents a significant risk and forces data centers to procure utility equipment on their own — putting them in direct competition with utilities for critical equipment. Lead times for gas generators have moved from under two years to five, and the price has increased by more than 50%. A local example of this impact is our natural gas plant in Keenesburg. United Power opened Mountain Peak Power last July, completing the project in just 20 months. Today, it would take five years to get the necessary equipment, and it would cost twice as much.

Clearly, there are valid concerns about the impacts of AI, but it is important not to confuse the critical nature of data centers with the worries about AI. Data centers support many of the services we rely on every day and are an important part of our lives.

The electric utility industry has dealt with growth spikes in the past — the cooperative movement that illuminated rural America, the adoption of air conditioning, and the digital revolution that began in the 1990s and continues to this day. Utilities have managed that growth every time.

At United Power, we will continue to plan responsibly for growth and focus on the needs of all our members, large and small. 

Please feel free to reach out to me with any questions or comments.