Small businesses may end up subsidizing the AI data centers of giant tech companies, according to a report from the Pennsylvania Sustainable Business Network.
There are more than 1 million small businesses in Pennsylvania that together employ 2.5 million people, about half of the state’s private workforce.
the report He said that segment of the economy typically operates on thin margins and may not be able to absorb higher electricity costs driven by data center development.
The report cited a march Voice of Main Street Poll which surveyed 247 small business owners nationwide. It found that 81% of small businesses saw their utility bills increase over the past year. More than half raised their prices and, in response, one in five froze hiring.
“Even a 10% increase in annual energy costs can have a significant impact on your ability to hire people and employ more people in the state, grow and expand your businesses or, in some cases, simply stay afloat,” said the report’s lead researcher, Michael Jarrett.
The report notes that recently capacity cost increases on the PJM power grid, which includes Pennsylvania, “is expected to result in an increase of 10% to 20% in residential electricity bills and up to 29% for businesses.”
Jarrett said small businesses can’t negotiate their energy bills like large corporations can.
“There are a lot of protections for residential consumers, especially low-income people,” Jarrett said, “but that doesn’t really exist for small businesses. They’re somewhere in the middle.”
The authors of the report support Governor Josh Shapiro’s initiative. GRID standardswhich are intended to protect energy affordability and encourage community participation in data center projects.
Jorge Luis Fontánez, who also worked on the report, said the state must ensure that communities have the ability to negotiate community benefit agreements.
“We warn that requiring negotiation without funding adequate technical assistance produces access without agency,” Fontánez said.
He said small businesses should have a place in negotiations over community benefits. Fontanez said the Pennsylvania Small Business Advocate’s Office has already intervened in utility rate cases, saving businesses money. He said the office could be expanded to help in the negotiation.
The report says immediate support for small businesses could include energy bill assistance programs, tax credits for energy expenses above a certain threshold and expanded grants for energy efficiency.
It also emphasizes the role clean energy can play in helping reduce electricity prices. The report says renewables are the cheapest form of energy that can be added to the electrical grid, but structural problems within the regional grid prevent renewables from coming online quickly.