A massive data center for Meta’s AI will likely lead to rate hikes for Louisiana customers, but Meta wants to keep the details under wraps.
Holly Ridge is a rural community bisected by US Highway 80, gridded with farmland, with a big creek—it is literally named Big Creek—running through it. It is home to rice and grain mills and an elementary school and a few houses. Soon, it will also be home to Meta’s massive, 4 million square foot AI data center hosting thousands of perpetually humming servers that require billions of watts of energy to power. And that energy-guzzling infrastructure will be partially paid for by Louisiana residents.
The plan is part of what Meta CEO Mark Zuckerberg said would be “a defining year for AI.” On Threads, Zuckerberg boasted that his company was “building a 2GW+ datacenter that is so large it would cover a significant part of Manhattan,” posting a map of Manhattan along with the data center overlaid. Zuckerberg went on to say that over the coming years, AI “will drive our core products and business, unlock historic innovation, and extend American technology leadership. Let's go build! 💪”
What Zuckerberg did not mention is that "Let's go build" refers not only to the massive data center but also three new Meta-subsidized, gas power plants and a transmission line to fuel it serviced by Entergy Louisiana, the region’s energy monopoly.
Key details about Meta’s investments with the data center remain vague, and Meta’s contracts with Entergy are largely cloaked from public scrutiny. But what is known is the $10 billion data center has been positioned as an enormous economic boon for the area—one that politicians bent over backward to facilitate—and Meta said it will invest $200 million into “local roads and water infrastructure.”
A January report from NOLA.com said that the the state had rewritten zoning laws, promised to change a law so that it no longer had to put state property up for public bidding, and rewrote what was supposed to be a tax incentive for broadband internet meant to bridge the digital divide so that it was only an incentive for data centers, all with the goal of luring in Meta.
But Entergy Louisiana’s residential customers, who live in one of the poorest regions of the state, will see their utility bills increase to pay for Meta’s energy infrastructure, according to Entergy’s application. Entergy estimates that amount will be small and will only cover a transmission line, but advocates for energy affordability say the costs could balloon depending on whether Meta agrees to finish paying for its three gas plants 15 years from now. The short-term rate increases will be debated in a public hearing before state regulators that has not yet been scheduled.
The Alliance for Affordable Energy called it a “black hole of energy use,” and said “to give perspective on how much electricity the Meta project will use: Meta’s energy needs are roughly 2.3x the power needs of Orleans Parish … it’s like building the power impact of a large city overnight in the middle of nowhere.”
404 Media reached out to Entergy for comment but did not receive a response.
By 2030, Entergy’s electricity prices are projected to increase 90 percent from where they were in 2018, although the company attributes much of that to damage to infrastructure from hurricanes. The state already has a high energy cost burden in part because of a storm damage to infrastructure, and balmy heat made worse by climate change that drives air conditioner use. The state's homes largely are not energy efficient, with many porous older buildings that don’t retain heat in the winter or remain cool in the summer.
“You don't just have high utility bills, you also have high repair costs, you have high insurance premiums, and it all contributes to housing insecurity,” said Andreanecia Morris, a member of Housing Louisiana, which is opposed to Entergy’s gas plant application. She believes Meta’s data center will make it worse. And Louisiana residents have reasons to distrust Entergy when it comes to passing off costs of new infrastructure: in 2018, the company’s New Orleans subsidiary was caught paying actors to testify on behalf of a new gas plant. “The fees for the gas plant have all been borne by the people of New Orleans,” Morris said.
In its application to build new gas plants and in public testimony, Entergy says the cost of Meta’s data center to customers will be minimal and has even suggested Meta’s presence will make their bills go down. But Meta’s commitments are temporary, many of Meta’s assurances are not binding, and crucial details about its deal with Entergy are shielded from public view, a structural issue with state energy regulators across the country.
AI data centers are being approved at a breakneck pace across the country, particularly in poorer regions where they are pitched as economic development projects to boost property tax receipts, bring in jobs and where they’re offered sizable tax breaks. Data centers typically don’t hire many people, though, with most jobs in security and janitorial work, along with temporary construction work. And the costs to the utility’s other customers can remain hidden because of a lack of scrutiny and the limited power of state energy regulators. Many data centers—like the one Meta is building in Holly Ridge—are being powered by fossil fuels. This has led to respiratory illness and other health risks and emitting greenhouse gasses that fuel climate change. In Memphis, a massive data center built to launch a chatbot for Elon Musks’ AI company is powered by smog-spewing methane turbines, in a region that leads the state for asthma rates.
“In terms of how big these new loads are, it's pretty astounding and kind of a new ball game,” said Paul Arbaje, an energy analyst with the Union of Concerned Scientists, which is opposing Entergy’s proposal to build three new gas-powered plants in Louisiana to power Meta’s data center.
Entergy Louisiana submitted a request to the state’s regulatory body to approve the construction of the new gas-powered plants that would create 2.3 gigawatts of power and cost $3.2 billion in the 1440 acre Franklin Farms megasite in Holly Ridge, an unincorporated community of Richland Parish. It is the first big data center announced since Louisiana passed large tax breaks for data centers last summer.
In its application to the public utility commission for gas plants, Entergy says that Meta has a planned investment of $5 billion in the region to build the gas plants in Richland Parish, Louisiana, where it claims in its application that the data center will employ 300-500 people with an average salary of $82,000 in what it points out is “a region of the state that has long struggled with a lack of economic development and high levels of poverty.” Meta’s official projection is that it will employ more than 500 people once the data center is operational. Entergy plans for the gas plants to be online by December 2028.
In testimony, Entergy officials refused to answer specific questions about job numbers, saying that the numbers are projections based on public statements from Meta.
A spokesperson for Louisiana’s Economic Development told 404 Media in an email that Meta “is contractually obligated to employ at least 500 full-time employees in order to receive incentive benefits.”
When asked about jobs, Meta pointed to a public facing list of its data centers, many of which the company says employ more than 300 people. A spokesperson said that the projections for the Richland Parish site are based on the scale of the 4 million square foot data center. The spokesperson said the jobs will include “engineering and other technical positions to operational roles and our onsite culinary staff.”
When asked if its job commitments are binding, the spokesperson declined to answer, saying, “We worked closely with Richland Parish and Louisiana Economic Development on mutually beneficial agreements that will support long-term growth in the area.”
Others are not as convinced. “Show me a data center that has that level of employment,” says Logan Burke, executive director of the Alliance for Affordable Energy in Louisiana.
Entergy has argued the new power plants are necessary to satiate the energy need from Meta’s massive hyperscale data center, which will be Meta’s largest data center and potentially the largest data center in the United States. It amounts to a 25 percent increase in Entergy Louisiana’s current load, according to the Alliance for Affordable Energy.
Entergy requested an exemption from a state law meant to ensure that it develops energy at the lowest cost by issuing a public request for proposals, claiming in its application and testimony that this would slow them down and cause them to lose their contracts with Meta.
Meta has agreed to subsidize the first 15 years of payments for construction of the gas plants, but the plant’s construction is being financed over 30 years. At the 15 year mark, its contract with Entergy ends. At that point, Meta may decide it doesn’t need three gas plants worth of energy because computing power has become more efficient or because its AI products are not profitable enough. Louisiana residents would be stuck with the remaining bill.
“It's not that they're paying the cost, they're just paying the mortgage for the time that they're under contract,” explained Devi Glick, an electric utility analyst with Synapse Energy.
When asked about the costs for the gas plants, a Meta spokesperson said, “Meta works with our utility partners to ensure we pay for the full costs of the energy service to our data centers.” The spokesperson said that any rate increases will be reviewed by the Louisiana Public Service Commission. These applications, called rate cases, are typically submitted by energy companies based on a broad projection of new infrastructure projects and energy needs.
Meta has technically not finalized its agreement with Entergy but Glick believes the company has already invested enough in the endeavor that it is unlikely to pull out now. Other companies have been reconsidering their gamble on AI data centers: Microsoft reversed course on centers requiring a combined 2 gigawatts of energy in the U.S. and Europe. Meta swept in to take on some of the leases, according to Bloomberg.
And in the short-term, Entergy is asking residential customers to help pay for a new transmission line for the gas plants at a cost of more than $500 million, according to Entergy’s application to Louisiana’s public utility board. In its application, the energy giant said customers’ bills will only rise by $1.66 a month to offset the costs of the transmission lines. Meta, for its part, said it will pay up to $1 million a year into a fund for low-income customers. When asked about the costs of the new transmission line, a Meta spokesperson said, “Like all other new customers joining the transmission system, one of the required transmission upgrades will provide significant benefits to the broader transmission system. This transmission upgrade is further in distance from the data center, so it was not wholly assigned to Meta.”
When Entergy was questioned in public testimony on whether the new transmission line would need to be built even without Meta’s massive data center, the company declined to answer, saying the question was hypothetical.
Some details of Meta’s contract with Entergy have been made available to groups legally intervening in Entergy’s application, meaning that they can submit testimony or request data from the company. These parties include the Alliance for Affordable Energy, the Sierra Club and the Union of Concerned Scientists.
But Meta—which will become Entergy’s largest customer by far and whose presence will impact the entire energy grid—is not required to answer questions or divulge any information to the energy board or any other parties. The Alliance for Affordable Energy and Union of Concerned Scientists attempted to make Meta a party to Entergy’s application—which would have required it to share information and submit to questioning—but a judge denied that motion on April 4.
The public utility commissions that approve energy infrastructure in most states are the main democratic lever to assure that data centers don’t negatively impact consumers. But they have no oversight over the tech companies running the data centers or the private companies that build the centers, leaving residential customers, consumer advocates and environmentalists in the dark. This is because they approve the power plants that fuel the data centers but do not have jurisdiction over the data centers themselves.
“This is kind of a relic of the past where there might be some energy service agreement between some large customer and the utility company, but it wouldn't require a whole new energy facility,” Arbaje said.
A research paper by Ari Peskoe and Eliza Martin published in March looked at 50 regulatory cases involving data centers, and found that tech companies were pushing some of the costs onto utility customers through secret contracts with the utilities. The paper found that utilities were often parroting rhetoric from AI boosting politicians—including President Biden—to suggest that pushing through permitting for AI data center infrastructure is a matter of national importance.
“The implication is that there’s no time to act differently,” the authors wrote.
In written testimony sent to the public service commission, Entergy CEO Phillip May argued that the company had to bypass a legally required request for proposals and requirement to find the cheapest energy sources for the sake of winning over Meta.
“If a prospective customer is choosing between two locations, and if that customer believes that location A can more quickly bring the facility online than location B, that customer is more likely to choose to build at location A,” he wrote.
Entergy also argues that building new gas plants will in fact lower electricity bills because Meta, as the largest customer for the gas plants, will pay a disproportionate share of energy costs. Naturally, some are skeptical that Entergy would overcharge what will be by far their largest customer to subsidize their residential customers. “They haven't shown any numbers to show how that's possible,” Burke says of this claim. Meta didn’t have a response to this specific claim when asked by 404 Media.
Some details, like how much energy Meta will really need, the details of its hiring in the area and its commitment to renewables are still cloaked in mystery.
“We can't ask discovery. We can't depose. There's no way for us to understand the agreement between them without [Meta] being at the table,” Burke said.
It’s not just Entergy. Big energy companies in other states are also pushing out costly fossil fuel infrastructure to court data centers and pushing costs onto captive residents. In Kentucky, the energy company that serves the Louisville area is proposing 2 new gas plants for hypothetical data centers that have yet to be contracted by any tech company. The company, PPL Electric Utilities, is also planning to offload the cost of new energy supply onto its residential customers just to become more competitive for data centers.
“It's one thing if rates go up so that customers can get increased reliability or better service, but customers shouldn't be on the hook to pay for new power plants to power data centers,” Cara Cooper, a coordinator with Kentuckians for Energy Democracy, which has intervened on an application for new gas plants there.
These rate increases don’t take into account the downstream effects on energy; as the supply of materials and fuel are inevitably usurped by large data center load, the cost of energy goes up to compensate, with everyday customers footing the bill, according to Glick with Synapse.
Glick says Entergy’s gas plants may not even be enough to satisfy the energy needs of Meta’s massive data center. In written testimony, Glick said that Entergy will have to either contract with a third party for more energy or build even more plants down the line to fuel Meta’s massive data center.
To fill the gap, Entergy has not ruled out lengthening the life of some of its coal plants, which it had planned to close in the next few years. The company already pushed back the deactivation date of one of its coal plants from 2028 to 2030.
The increased demand for gas power for data centers has already created a widely-reported bottleneck for gas turbines, the majority of which are built by 3 companies. One of those companies, Siemens Energy, told Politico that turbines are “selling faster than they can increase manufacturing capacity,” which the company attributed to data centers.
Most of the organizations concerned about the situation in Louisiana view Meta’s massive data center as inevitable and are trying to soften its impact by getting Entergy to utilize more renewables and make more concrete economic development promises.
Andreanecia Morris, with Housing Louisiana, believes the lack of transparency from public utility commissions is a bigger problem than just Meta. “Simply making Meta go away, isn't the point,” Morris says. “The point has to be that the Public Service Commission is held accountable.”
Burke says Entergy owns less than 200 megawatts of renewable energy in Louisiana, a fraction of the fossil fuels it is proposing to fuel Meta’s center. Entergy was approved by Louisiana’s public utility commission to build out three gigawatts of solar energy last year , but has yet to build any of it.
“They're saying one thing, but they're really putting all of their energy into the other,” Burke says.
New gas plants are hugely troubling for the climate. But ironically, advocates for affordable energy are equally concerned that the plants will lie around disused - with Louisiana residents stuck with the financing for their construction and upkeep. Generative AI has yet to prove its profitability and the computing heavy strategy of American tech companies may prove unnecessary given less resource intensive alternatives coming out of China.
“There's such a real threat in such a nascent industry that what is being built is not what is going to be needed in the long run,” said Burke. “The challenge remains that residential rate payers in the long run are being asked to finance the risk, and obviously that benefits the utilities, and it really benefits some of the most wealthy companies in the world, But it sure is risky for the folks who are living right next door.”
The Alliance for Affordable Energy expects the commission to make a decision on the plants this fall.