A surge in data centers across the western United States is driving up electricity and water demands, potentially increasing consumer bills and hindering climate goals. A new report from Western Resource Advocates warns that without stronger regulations, households could bear the financial and environmental costs. The boom risks extending fossil fuel use and straining water supplies in arid regions.
Data centers are proliferating from Phoenix to Colorado’s Front Range, with new facilities expected in Arizona, Colorado, Nevada, New Mexico, and Utah. According to a report by the Western Resource Advocates (WRA), this growth could boost the Interior West’s electricity demand by 55 percent by 2035. The scale is immense: planned data centers will require enough power each year to supply 25 cities the size of Las Vegas within the next decade, says Deborah Kapiloff, a WRA clean energy policy advisor and report co-author.
Energy demands threaten decarbonization efforts. NV Energy, Nevada’s primary utility, now projects a 53 percent rise in carbon emissions over 2022 estimates due to data center expansion. In Colorado, utilities may need to double power production within five years, according to John Gavan, a former Colorado Public Utility Commission member. “The scale here is mind-boggling,” Gavan says. “A single hyperscale data center could consume 10 percent or more of the entire state’s load.”
Consumers face higher bills as utilities spread infrastructure costs across all users. Joseph Pereira, deputy director at the Colorado Office of the Utility Consumer Advocate, warns of 30 to 50 percent rate hikes for households, potentially doubling or tripling long-term. “If we build the infrastructure and then data center loads don’t show up, somebody is left holding the bag (for the costs),” Pereira says. “Today, that’s existing customers.” Kapiloff adds, “When the customer is this large, the old assumption that ‘growth helps everyone’ doesn’t hold.”
Water use adds pressure in water-stressed areas. In Nevada, proposed data centers could consume 4.5 billion gallons in 2030, rising to 7 billion by 2035—enough for nearly 200,000 people. Near Tucson, Arizona’s Project Blue has sparked controversy, with initial plans demanding “millions upon millions of gallons,” per Pima County Supervisor Jennifer Allen. Community backlash led to a redesign claiming minimal water use, though documentation is lacking. “We have a lack of information about how much total water data centers are using—it’s a big black box,” Kapiloff notes.
Secrecy hampers oversight. For Project Blue’s first phase, NDAs blocked Pima County supervisors from full details, says Allen: “Shrouded in secrecy was the game.” Advocate Allegra Jordan stresses informed consent: “The moral issue is whether or not people should have consent in whether or not their power bills go up, or how their water is being used.”
In response, Pima County added safeguards like NDA limits and a public “sunshine period” before votes. WRA suggests energy-efficiency mandates, ending tax incentives, and prioritizing renewables. Tools include specialized rates for large users and clean transition tariffs. European examples, like Finland’s data centers heating 100,000 homes, offer models. As Kapiloff concludes, “When you have some of the most highly capitalized corporations in the world building these data centers, does it make sense to have that cost be borne by everyday folks? I think the answer to that is a resounding no.”