Data-center questions need answers | Arkansas Democrat Gazette

Thirteen months ago, with little notice, we were asked to approve plans for a data center in Little Rock. The Little Rock Chamber of Commerce and others encouraged us to move forward, saying it's great for our city, and economic development competition prevented more disclosure.

We did, and have spent a significant amount of time over the last year asking questions that should be answered up front. Equally significant, since that time data centers have been announced in the county (AVAIO), eastern Arkansas, and possibly Conway.

While there are benefits to data centers, we need a moratorium until all the questions regarding electricity costs, water resiliency, environmental exposure, tax revenue adequacy, and more are answered. With 44 percent of Arkansans below the federal poverty line and 28 percent qualifying as the working poor, one unexpected bill can be devastating.

Each facility requires an enormous amount of power, constant electricity to power hundreds of computers and circulating water needed for cooling. Entergy Arkansas must expand generation and transmission capacity well beyond anything they have done in recent memory. Entergy already faces a capacity crisis that has nothing to do with data centers; the White Bluff coal-fired generating station in Jefferson County is under a court order to cease operations by 2028. That alone necessitates new investment.

Three replacement plants are currently under construction--two in Jefferson County and one in Hot Springs--with a combined output roughly equal to the output White Bluff provides today. Are these plants to replace aging infrastructure, or to serve the incoming load? While we might not get a real answer--electrons that leave a turbine in Jefferson County might power a home in Maumelle or a server rack at the port--that ambiguity has financial consequences.

In June, Entergy customers will see a $5.77 rate increase to help finance those plants. One has been linked to the Google West Memphis project, where Google has said it will contribute, but non-disclosure laws hide the specifics. Again, we are being asked to trust that it will be fair.

In March, Entergy announced a "Fair Share Plus" commitment, which says data centers will ultimately save non-data-center customers $1.7 billion by spreading the cost of infrastructure upgrades across a larger base. This theory--cost socialization--is how utilities have always worked. Large new customers can reduce upgrades and maintenance costs for everyone.

But the $1.7 billion figure invites scrutiny. What models were used, what were the underlying projections, and what will residential rates look like over the next two decades with--or without--data centers? While the specific terms of Google and AVAIO's may be confidential, residential customers deserve specifics.

Central Arkansas Water draws from Lake Maumelle and Lake Winona, both replenished by rainfall runoff. Google LR and AVAIO plan to use CAW-supplied water for cooling. Recently we learned that Google and AVAIO will consume an average of four million gallons of water per day, and more during peak hot weather. CAW's "safe yield," the standard industry measure of how much water a system can reliably deliver during a drought, is calculated at 120 million gallons a day, nearly double the current the average daily delivery of 66 million gallons. By that metric, capacity seems ample.

As CAW loses some wholesale customers in Saline County, full-paying customers like data centers could strengthen CAW's balance sheet and help fund already-planned infrastructure upgrades without additional rate increases.

CAW's long-range models project adequate supplies through the end of the century, and officials state that no rate increases will result beyond those already scheduled due to data center consumption.

However, there is a significant caveat: Safe-yield calculations are inherently backward-looking. They are based on historical drought information, not forward projections that account for population growth, changing precipitation patterns, or the compounding effects of climate change. A severe, prolonged drought could expose vulnerabilities that current models don't capture.

Modern data centers tend to be purpose-built, heavily insulated, and relatively quiet. The environmental questions center on what happens outside the walls, specifically, whether on-site power generation introduces noise and air pollution to surrounding communities.

It remains unknown whether Google will use backup generators, though it's reasonable to assume they will if power to the grid is lost. What protections will be in place for residents near the centers? Are walls and wooded buffers sufficient to contain the noise from AVAIO's continuously operating generators? Where is the plan for managing air emissions? Contradictions exist between AVAIO's website and published statements, further necessitating the importance of specific and accurate answers.

Another important environmental issue concerns surrounding wetlands. While Google touts its wetlands credit program, detailed answers have not been provided. For this reason, we provided comments to the Army Corps of Engineers requesting denial of the permits.

Tax revenue is the most cited benefit of data center development, yet again, the numbers are vague. The Memorandum of Understanding with Google includes an annual payment of $300,000 to Little Rock. Who will determine how that will be used? While some of the property taxes will be abated, what is the expected revenue from the 35 percent not abated?

Proponents of data centers tout statistics about data centers attracting other companies, the so-called "halo effect" used to attract other companies, expanding job opportunities and employment. Will that hold true in Pulaski County, without an existing tech workforce and proximity to massive federal agencies, like the county most cited for the halo effect, Loudon County, Va.?

While companies are expected to benefit from their investments, do the benefits to local governments and residents outweigh the costs? For the 44 percent of Arkansans who struggle with paying their bills, even a marginal increase in utility bills can be a choice between keeping the lights on or paying the rent.

The Little Rock Port gives Little Rock an advantage. But more questions need to be asked regarding each land purchase (and they are). We need to encourage all economic developers to use new models of transparency and rigorous public accounting. We need fewer non-disclosure agreements, projections that are based on assumptions that are stress-tested, and more open conversations up-front.

Capi Peck is Little Rock City Director, Ward 4; Kathy Webb is Little Rock City Director, Ward 3.