A Nevada utility will cut its power supply to 49,000 Lake Tahoe residents after May 2027, redirecting electricity to serve new AI data centers for Google, Apple, and Microsoft.
"We have no representation. It's resource extraction," Danielle Hughes, CEO of the non-profit advocacy group Tahoe Spark, told Fortune, highlighting the community's lack of leverage against large industrial power users.
The move by NV Energy terminates a long-standing agreement to supply 75% of the power used by Liberty Utilities, the California-based company serving the Lake Tahoe area. Data centers accounted for 22% of NV Energy's load in 2024, a figure expected to hit 35% by 2030, with 12 new projects in Northern Nevada potentially demanding 5,900 megawatts by 2033, according to the Desert Research Institute.
The termination leaves 49,000 residential customers in a precarious position, as their small utility must now compete for power on the open market against giant tech firms. Liberty Utilities has requested an emergency procurement authorization from California regulators to find a replacement source before the 2027 deadline.
This case is an extreme example of a nationwide trend. Across the US, the immense electricity needs of the AI industry are reshaping energy grids and driving up costs for residential customers. AI data centers are forecast to triple their share of US electricity consumption to 12% by 2028, up from 4.4% in 2023. In Virginia, data centers already consume more than one in four kilowatt-hours, prompting utilities like Dominion Energy to propose residential rate hikes.
The Lake Tahoe situation is complicated by a jurisdictional mismatch. Liberty Utilities is regulated by California, but its grid infrastructure is located within NV Energy's Nevada-based balancing authority, leaving California regulators with little power to force a resolution. Building a direct connection to California's grid would be a costly and time-consuming project, estimated to be in the hundreds of millions of dollars.
The situation in Lake Tahoe highlights a critical bottleneck for AI's growth and may accelerate residential adoption of solar and battery storage as homeowners seek to insulate themselves from grid instability and rising costs driven by industrial demand. The key date to watch is the May 2027 contract termination.
This article is for informational purposes only and does not constitute investment advice.
