taking responsibility for electricity use
In a Microsoft blog post, Smith acknowledged that residential electricity rates have increased recently in dozens of states, driven in part by inflation, supply chain disruptions and grid upgrades. He wrote that communities “value new jobs and property tax revenue, but not when they come with higher electric bills or reduced water supplies.”
Microsoft says it will ask utilities and public commissions to set rates high enough to cover the entire power cost for its data centers, including infrastructure additions. In Wisconsin, the company is supporting a new rate structure that would charge “very large customers,” including data centers, the cost of the electricity needed to service them.
Smith wrote that while some have suggested that the public should help pay for the additional power needed for AI, Microsoft disagrees. He said, “Especially when tech companies are so profitable, we believe asking the public to bear additional power costs for AI is unfair and politically unrealistic for our industry.”
On water use for cooling, Microsoft plans to improve data center water-use intensity by 40 percent by 2030. A recent environmental audit by AI model-maker Mistral found that training and running its Big 2 model over 18 months produced 20.4 kilotonnes of CO.2 The emissions and evaporated water would be enough to fill 112 Olympic-sized swimming pools, showing the overall environmental impact of large-scale AI operations.
To solve some of these issues, Microsoft says it has launched a new AI data center design using a closed-loop system that continuously recirculates the cooling liquid, dramatically cutting water usage. This design, already deployed in Wisconsin and Georgia, no longer requires potable water for cooling.
On property taxes, Smith said in the blog post that the company will not ask local municipalities to lower their rates. The company says it will pay its full share in local property taxes. Smith wrote that Microsoft aims to realize these commitments in the first half of 2026. Of course, these are PR-aligned company goals and not realities yet, so we’ll have to check back later to see if Microsoft is following through on its promises.
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