One of the biggest trends of the world of computing is Artificial Intelligence or AI and one of the keys to AI is faster and faster processing computer chips. To be faster and faster takes a great deal of electrical power. Companies that are building data centers examined the country to find out where there is surplus power generation and locate data centres near those sites. This is a good thing for both the company and the company producing the electricity.

In an article by Marc Levy of the Associated Press, what is good for the company and the company producing the power may not be good for the rest of the users. The story is if you live in a home, you turn on a light, the electricity comes from the grid which is a mixture of wires to your home, which come from the wires from the transmission towers which connects to the wires from the plant which makes the electricity. The deals between the power plant and data center directly avoids the potentially longer and more expensive process of hooking into electrical grid that serves everyone else.

In the article, the example is Amazon Web Service or AWS has signed a deal with Talen Energy which owns the Susquehanna nuclear power plant in eastern Pennsylvania. There are advantages to both companies.

2 eclectic utility owners – Chicago based Exelon Corp and Columbus based American Electric Power says the deal would allow AWS to avoid a $140 million a year for grid payments it would otherwise owe. Or if AWS does not pay, someone else has to pay for the maintenance of the grid.

The Federal Energy Regulatory Commission or FERC is the agency which must make the decision.

Linking to dividend paying stocks, for a long-time investor-owned utility companies have been a wonderful investment. They operate a monopoly like operation with the consent of the government and the regulator typically allows rates to increase every year. As long as the economic environment for the area is reasonably stable, the utility should be able to produce profits and implement capital spending plans that stay on budget which allows for stable growth and consistent profits including dividend payments. However, with every industry that can be changes and regulations can change.

There are more questions than answers, till the next time – to raising questions.

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