ANALYSIS

In just seconds, a click and a prompt can conjure a song or a compelling story lede as if by magic. But behind the seamless convenience of AI tools lies an insatiable appetite for energy. Data centers powering artificial intelligence consume as much electricity as entire cities, straining grids and reshaping energy landscapes. 

To meet demand, in Louisiana and elsewhere, utilities are rushing to build fossil fuel-powered plants that are pushing off sustainable energy goals, while exposing struggling communities to more greenhouse gas emissions from these energy-hungry data centers. 

Regulators face mounting pressure to provide reliable power while trying to avoid being locked into long-term commitments to fossil fuel projects.

“We are in a race,” said Davante Lewis, the Democratic wunderkind elected in 2022 to the powerful Louisiana Public Service Commission (PSC) that regulates utilities outside of New Orleans

Lewis is referring to a proposal by Louisiana’s largest incumbent utility, Entergy Corp., to build a massive AI data center in an impoverished section of north Louisiana, whose energy needs would equal a third of all Louisiana households. The $10 billion project is being touted as the largest single investment in Louisiana history. Shrouded in nondisclosure agreements for weeks, the project promises 300 to 500 jobs with fat salaries while obscuring a darker subtext: a surge in energy demand that would lean heavily on fossil fuels.

Even as Entergy touted nuclear, wind, and hydrogen “co-firing” as part of its late October proposal to the Louisiana Public Service Commission (PSC), most of the power would be supplied by three new gas-fired generators whose $3.2 billion price tag will be shouldered by ratepayers.

Entergy is asking the PSC to approve plant construction by October 2025 without a competitive bidding process.

The Southern Renewable Energy Association, Union of Concerned Scientists, and industry-backed Louisiana Energy Users Group among others have filed motions to intervene, arguing that renewable power could be provided at lower costs without expensive new generators.

“Louisiana ratepayers already suffer the consequences of overreliance on gas,”  Union of Concerned Scientists analyst Paul Arbaje said in a motion last week. 

We pay more for electricity from one of the least reliable grids, the Legislative auditor reported last month.  

In November, officials revealed that the owner of the mysterious data center is Facebook’s parent company, Meta, which plans to build a 4-million-square-foot facility outside of Monroe. 

Meta is pledging to offset some emissions with purchases of 1,500 megawatts of solar power and financial support for a carbon capture and storage project at Entergy’s power plant in Lake Charles, according to Entergy’s filings to the PSC. 

“[Entergy] expressed the need to get this done quickly and get the data center to market quickly,” Dana Shelton, an attorney advisor to the PSC told the commission at a November 20, 2024, PSC hearing. 

Public Service Commissioner Foster Campbell, a Democrat representing north Louisiana and a perennial skeptic of utilities’ plans to build expensive power plants, said at the meeting that he will champion the project in his home territory. “I back the project 1,000 percent,” he said. “The parishes of North Louisiana are the poorest in the nation. Poorer than Appalachia.”

Monopoly Utilities Have No Incentives for Net Zero

It’s an old tale: weighing the lure of new jobs against long-term strategies for a livable planet. Under the 2015 Paris Climate Agreement, which President Trump once again withdrew the U.S. from in January, the world’s nations pledged to reduce their emissions to net zero by 2050 to stave off the worst effects of climate change.

These effects are expected to hit poorer communities like north Louisiana the hardest. 

Utilities are considered one of the largest sources of greenhouse gas emissions. So, the road to “net zero” runs through the grid. (“Net-zero” emissions refer to the point when emissions equal the amount of carbon stored.) Currently, the world emits twice the amount of greenhouse gases it stores in oceans, forests, and other natural sequestration sinks. We have to do two things to reach net zero: expand the planet’s natural systems by limiting ocean acidification, reversing deforestation, and lowering emissions.

Like most people, as a captive ratepayer, I don’t have much say about the monopoly utility that supplies my energy. Entergy Corp., whose subsidiary is regulated by the City Council, charges me for the cost of producing electricity or buying it on the open market. It charges me for its infrastructure maintenance and repairs. I also pay to build its giant power generators — like the Nine Mile Point natural gas turbines in Westwego, LA, that tower over the Mississippi, releasing plumes of smoke that a child might mistake for a cloud factory. Yet, I do not own any of it. Entergy does, which is a pretty good deal for Entergy.

Almost all of Entergy’s power generation comes from seven gas-fired generators. Entergy also owns two nuclear stations that supply about 18 percent of Louisiana’s electricity. When natural gas prices spiked in 2022 after Russia invaded Ukraine, Entergy was forced to buy really expensive natural gas to run its generators. Customer  bills exploded. Entergy made the same profit. 

“We created this regulatory compact in the early 1900s when we were trying to incentivize private utility companies to invest in the infrastructure for the social good,” Lewis told me. “In return, they were guaranteed a return on their investment. The compact as it is doesn’t de-incentivize them to stop building.”

Utility companies have little financial incentive, he said, to support initiatives to save energy, improve the intelligence of the grid, or diversify sources of energy.

An Outsider Takes on an Unmonitored Authority

A progressive Democrat, Lewis is an unlikely politician in deep-red Louisiana. He is young, Black, and openly gay. But his policy expertise and pragmatic vision have united odd bedfellows in a district that includes the state’s largest petrochemical plants and refineries alongside environmental justice communities. From grandma on a fixed income to the chemical plant next door, all want reliable electricity that doesn’t cost the farm, he said.

To get on the PSC, Lewis had to unseat an 18-year incumbent and former New Orleans councilman, Lambert Boissiere III, who had strong ties to utility interests. According to the Energy and Policy Institute, almost 75 percent of Bossiere’s campaign contributions came from entities regulated by the PSC, including Entergy itself. 

Lewis beat him by 20 points in an election runoff, which thrust the commission into the spotlight in a way that hasn’t been seen in a century — since a 25-year-old firebrand named Huey Long from hardscrabble Winn Parish attempted to declare Standard Oil a public utility in 1922. Long, Louisiana’s populist demagogue, would become governor at age 34 and a U.S. Senator at 38. Four other Public Service commissioners followed Long to the governor’s mansion, most recently Kathleen Babineaux Blanco in 2004. But the utilities authority has been a quiet board in recent years, as predictable votes back utility interests, such as rolling back discounts for solar net metering, and passing large repair costs and capital expenses onto ratepayers.

The results of an unwatched regulatory commission have been grim. Renewable power produces just 4% of Louisiana’s electricity, which is among the nation’s lowest. Of that, wind and solar account for a mere 1% of electricity. Customer utility bills are chock full of pass-through charges approved by the PSC and City Council to cover hurricane repairs, late fee hookups, and other miscellaneous expenses. Entergy is currently seeking to recoup damages from Hurricane Francine from ratepayers who are still repaying Entergy for six storms that date as far back as 2012.

Louisiana’s low-income residents also have the dubious distinction of being the most “cost-burdened” by energy, meaning that they spend a higher percentage of their paycheck on electricity and heating than anyone else in the nation, according to Lewis and Home Energy Affordability Gap data. 

“They are sharks,” a commission insider who asked not to be named told me in an interview. “Entergy is the only Fortune 500 company in the state of Louisiana. That is a moral failure. It profits on the backs of captive ratepayers who have no other choice.” 

The utility companies outgun the undermanned commission staff at every turn. Meanwhile, the education program that newly elected commissioners receive is provided by the Edison Electric Institute, which is the trade association for utilities. “So they were the ones to teach me how to regulate them,” Lewis said at Tulane University’s energy forum in November 2024.

While other areas of the country have introduced competition for wholesale generation and decentralized technologies that favor renewables like wind and solar, Louisiana’s grid largely remains closed to competition. The fossil fuel industry, which influences Louisiana’s political class, has long dampened the momentum for renewables, either by allowing the state tax credit for solar panels to expire in 2016 or by directly obstructing it. 

But the biggest obstacles are the incumbent utilities themselves, who resist being interconnected with one another, Lewis told me. “You go build another gas power plant, you’re talking about a 30-year generation asset with depreciation,” he said.

Opening Louisiana’s grid to competition or expanding access to regional grid exchanges would provide more options for inexpensive, reliable power. But Entergy does not want that to happen, said Logan Burke, executive director of the Alliance for Affordable Energy.

The Department of Justice ordered the company in 2012 to enter into an independent regional grid. Entergy elected to join the Mid-continent Independent System Operator (MISO), which is one of 10 regional grids. MISO connects power sources from the upper midwest down through Arkansas and Louisiana. However, the grid map resembles an hourglass with a singular bottleneck right at the northwest confluence of Arkansas, Tennessee, Kentucky, and Indiana that prevents scaled power movement from MISO North to MISO South. 

Some observers say that Entergy picked MISO because it allowed the company to remain centered in MISO South to control the power sources it delivers to customers. And as far as selling off its transmission lines, Entergy never did it, says Burke, whose organization is pushing the PSC to establish a greater presence on the MISO board to expand connections between North and South. “We are right where we were 12 years ago,” she said.

The longer Entergy drags its feet on renewables, the more it will perpetuate the “urgent” need for dirty power as electricity demand for data centers around the country increases, said Monika Gerhart with the Gulf States Renewable Power Association. “We have to get in front of that for our load requirements.”

An electrifying prospect

Looking at a chart from the World Energy Outlook 2024 report by the International Energy Agency (IEA), electrical demand over the next decade will resemble an upturned hockey stick if you can picture it. The IEA projects electricity demand will grow by six-fold between now and 2035. “The utility sector will make or break America’s clean energy future,” Lewis told me.

The good news is that solar and wind cost less per kilowatt hour than natural gas and nuclear, Brad Ives, the director of the LSU Energy Innovation Institute (EII), said during the 2024 Louisiana Energy Outlook webcast. Shell funded the EII with a $27.55 million grant. “I think that’s not something that’s widely known,” Ives said.

The EIA reported this week that 81% of new power generation this year will come from battery-solar.

Meanwhile, as sectors of the economy move to renewable energy sources and increased electrification — demand on the grid will increase, International Energy Agency (IEA) projections show. More heat pumps and EVs means higher loads per household and per street. 

Greening the grid by producing electricity from renewable sources is the low-hanging fruit of the world’s decarbonization strategy. If it doesn’t happen in electricity production, it’s not going to happen, experts say.

“Grids are very important,” said Adair Turner, the chairman of the UK’s Energy Transition Commission. Speaking at a June 2024 sustainability event in London, Turner forecasted that the grid would need to be fully decarbonized by 2035 if the world hopes to clean up polluting industries like cement, steel, shipping, and aviation by 2050. “Investing in the grids is required to support higher levels of electrification,” Adair said.

AI’s exponential growth suggests that the electrical grid will be under exponential pressure to meet this growing demand. But its future is still wildly speculative. Just this week, it was revealed that Microsoft is backing out of AI lease agreements. If that were to happen to the Meta project in North Louisiana, rate payers could be on the hook for billions in stranded fossil fuel assets.

That leaves commissioners like Lewis in a bunch. Stick with Entergy’s move towards gas-powered plants; or push monopoly utilities to open their transmission lines to  renewable power and avoid being locked into long-term investments in fossil fuels, as Lewis advocates. 

“I don’t think there’s any other way to decarbonize,” he said.

Ned Randolph investigates intersections of power, social justice, and the environment. He is the author of Muddy Thinking in the Mississippi River Delta, which examines how the unruly Mississippi River and its muddy delta shaped the people, culture, and governance of the New Orleans region. This piece was first published by the nonprofit newsroom DeSmog, “the world’s number one source for accurate, fact-based information regarding global warming misinformation campaigns.”