Higher electricity demand could send electricity rates skyward.

Higher electricity demand could send electricity rates skyward.

Data Centers Threaten to Doom Families to Fuel Poverty

Corporate welfare violates the Wyoming Constitution.
Data Center tax breaks cost taxpayers more than $500,000 per job.
Instead of picking winners and losers, the government should reduce taxes for all companies and let those with good ideas and private funding prevail.

CHEYENNE, WY: The Wyoming Liberty Group released “Data Centers, The Hidden Costs of Corporate Welfare” today, blasting the government’s policy of using tax dollars to attract businesses to the state and warning families about the specter of fuel poverty as a result of the latest corporate welfare fad.



“Wyoming’s political class continues to throw tax dollars at companies for short-term political gain, even though past experience with corporate welfare shows a poor record for picking winners,” said Maureen Bader, Wyoming Liberty Group economist. “Data centers, the latest handout favorite, could hit family budgets directly, should the electricity demand of these centers require the construction of new electricity generating plants.”

The report outlines the problems with corporate welfare and uses data centers to illustrate the costs. In addition to listing tax breaks enjoyed by data centers, the report shows that family electricity bills could double should coal be eliminated from Wyoming’s energy mix.

“If politicians really understood why tax reductions stimulate job creation, they would offer the same breaks to all businesses, not just the headline makers,” said Bader. “Worse still, the potential surge in electricity demand portends and enormous risk representing a huge burden on family budgets, as construction costs and government regulations escalate the cost of electricity from new plants.”

Data centers across the United States already use approximately 2-percent of all the electricity produced in the U.S., a 33 percent increase over 2006 consumption levels. As a result of new Environmental Protection Agency (EPA) regulations, public utilities are closing coal-fired electricity generating plants and replacing them with gas-fired plants, which is now driving up electricity rates. According to the report’s analysis, should gas replace all coal use by a public utility in Cheyenne, Wyoming, family electricity costs will double.

“The EPA has launched an energy crusade against American families so Wyoming’s government must stop bribing energy hogs to the state,” said Bader. “Data centers don’t create many jobs and their insatiable appetite for electricity will send rates into the stratosphere, which would kill jobs in non-subsidized sectors of the economy, resulting in a net loss of jobs and state revenue.”

Maureen Bader, economist
Wyoming Liberty Group