Who Will Pay the Cost for AI, New Data Centers?

By Dr. Gay Lee

Part 1 of a 3 part series

Artificial intelligence is changing our economy, our workplaces, and our everyday lives. Behind AI are massive computer systems housed in data centers. These facilities can bring billions of dollars in private investment to New York and the Hudson Valley.

I support technology. I support innovation. And I want companies to invest here.

But, in my opinion, welcoming investment does not mean that we should simply say yes to every project without asking some basic questions.

How much electricity will it use? How much water will it require? What will it mean for our environment? What new infrastructure will be needed? And most importantly, who is going to pay for it?

These are environmental justice questions.

For generations, lower-income communities and communities of color have often carried more than their fair share of the environmental consequences of development. Communities have been promised jobs and economic growth, but too often they have also been left with pollution, traffic, noise, health concerns, and other problems.

We should not make those same mistakes as we build the infrastructure for artificial intelligence.

In my opinion, major data-center projects receiving substantial public tax benefits or other government assistance should be required to enter into a binding Environmental Justice, Ratepayer Protection and Community Benefits Agreement.

Promises are not enough. The protections should be written down, measurable, and enforceable.

Who Is Going to Pay the Electric Bill?

This is one of my biggest concerns.

Large data centers can require enormous amounts of electricity. They may operate 24 hours a day, seven days a week. Supplying that power may require new substations, transformers, transmission lines, interconnection equipment, energy storage, and other improvements to our electrical system.

That infrastructure can be expensive.

I do not believe Hudson Valley families and small businesses should be forced to subsidize infrastructure being built primarily to serve multibillion-dollar technology companies.

My position is simple:

The company creating the demand should pay its fair share of the cost.

To the fullest extent allowed under state law, companies should pay for the electrical infrastructure their projects require.

I am also concerned about what happens years later.

Suppose hundreds of millions of dollars are invested in electrical infrastructure for a data center and the company later closes, moves, reduces its operations, or requires much less electricity.

Who pays what is left?

It should not be homeowners. It should not be seniors living on fixed incomes. And it should not be small businesses.

We need financial protections that prevent those costs from being transferred to ordinary ratepayers.

No Hudson Valley family should see its utility bill increase because a billion-dollar corporation needs massive amounts of electricity.

We Must Protect Our Water

Electricity is not the only concern.

Some data centers can use significant amounts of water for cooling. Before any major project is approved, I believe the public has a right to know how much water will be used, where it will come from, what cooling system will be used, what happens during a drought, whether drinking-water supplies could be affected, and how wastewater will be handled.

These questions should be answered before construction begins, not after a problem develops.

Water is a public resource.

Protecting it is part of environmental justice.

Communities Deserve a Voice

I also believe residents should have a meaningful voice before major decisions are made.

Data-center agreements should not be negotiated behind closed doors and then presented to residents as a finished product.

People deserve information about electricity, water, traffic, noise, backup generators, land use, environmental impacts, tax benefits, and infrastructure costs.

And public involvement should not end once construction begins.

Companies receiving substantial public assistance should provide regular reports so residents can see whether they are meeting their environmental and community commitments.

Economic development should be something we do with communities, not something we do to communities.

Environmental Justice Requires Accountability

A community agreement means very little if nobody can enforce it.

If a company receives public benefits and fails to meet significant environmental or infrastructure commitments, there should be consequences permitted by law.

And companies should not be able to escape their responsibilities simply by selling a facility. Whenever legally possible, those obligations should follow the project.

I welcome technology companies to the Hudson Valley.

Come invest here. Come build here. Come innovate here.

But if your project depends upon our land, electricity, water, infrastructure, tax incentives, and other public resources, then you also have a responsibility to the people who live here.

In my opinion, technological progress should never require working families to subsidize billion-dollar corporations or lower-income communities to carry another generation of environmental burdens.

We can welcome progress while protecting the people and communities that make that progress possible.