AI Deal???

What to Know About Trump's AI Deal

The president said the deal will lower electricity costs, but there are reasons to doubt it will.

By Katherine Long and Peter Behr

President Donald Trump’s newly released plan to shield voters from rising electricity costs tied to the data center boom faces a host of questions — most fundamentally: Does it have any chance of working?

Reasons exist to doubt it will, especially given the pledge’s language is nonbinding. It also comes as a war in Iran spreads throughout the Middle East, with missiles and drones threatening to disrupt global supply chains by damaging energy infrastructure across the region.

Here are four key things to know about the plan, as Trump and other Republicans face growing attacks from Democrats about the rising costs of energy:

What exactly is this pledge?

The “ratepayer protection pledge” signed by Google, Microsoft, Meta, Oracle, xAI, OpenAI and Amazon is meant to ensure residents don’t pay for the electricity used to power data centers. The companies agreed to build, provide or buy any power their data center infrastructure needs.

By having tech companies front these costs, Trump said Wednesday, Americans will avoid increased energy prices — and in fact, these prices could drop “very substantially.”

In turn, Trump said, the government will speed up the process for approving power plants, issuing permits within two to four weeks. However, states — not the federal government — are primarily responsible for approving the development of electricity generation.

The companies also committed to hiring and training talent in the communities where these data centers reside, building on the tech lobby’s message that infrastructure will create jobs and promote economic growth.

“We’re incredibly proud of the thousands of jobs Meta data centers are creating across the country, while our investments in small business and workforce training programs ensure Americans have the skills needed for the jobs of tomorrow,” Meta President Dina Powell McCormick said in a statement.

How binding is it?

While the administration has no official tools to enforce the pledge, the White House said it expects companies to voluntarily abide by the language to ensure approval of future projects.

“All of these companies require lots of government approvals to build these very large facilities,” said a senior White House official, granted anonymity because they were not authorized to speculate publicly on the terms of the deals. “We’re not worried about people going rogue or cowboy on it.”

Michael Kratsios, director of the White House Office of Science and Technology Policy, told reporters Wednesday that the companies will also voluntarily negotiate utility rates in states where they build data centers. The agreement is meant to ensure tech companies aren’t lowering rates to force the cost burden onto community members, but it won’t be enforced beyond the pledge.

“We are challenging these companies to think bigger when it comes to data center construction by identifying ways this infrastructure can drive down overall electricity costs, strengthen grid resilience and create more American jobs,” Kratsios said.

The voluntary nature of the pledge is a shift from Trump’s rhetoric during an event in Corpus Christi, Texas, last week, where he said the deal would be “mandatory.”

The lack of any mandatory requirements was already a concern immediately after Trump unveiled the pledges during his State of the Union address last week. State and federal lawmakers on both sides of the aisle said they fear the effort won’t lead to meaningful change unless a judge can enforce it.

Will this really do what Trump is promising?

That’s a complicated question. Trump is running into the unprecedented scale of the AI data center boom, which is raising the costs of everything that goes into the energy infrastructure.

Nearly 680 data centers are being planned in the United States, according to the data firm Cleanview, some of them requiring as much electricity as a small or mid-sized city.

The Electric Power Research Institute has estimated that data centers could require 9 percent to 17 percent of U.S. electric power by 2030, compared with a 4 to 5 percent share today. Estimates of power demand continue to ratchet up, and that’s pushing up prices of turbine generators, aluminum and copper for wires, steel for towers, electronic controls, and the labor costs of putting the infrastructure in place.

American households ultimately pay those costs through utility rates.

The White House fact sheet detailing the commitments said the companies “will pay for all power delivery infrastructure upgrades required for their data centers” — without detailing how much grid infrastructure that actually covers.

While the seven tech companies have the financial strength to make the commitment, it remains to be seen how far the pledge extends across the entire data center development universe, and whether the manufacturers of power plants can match the unprecedented demands for new power.

“We have seen transmission rates increase over the last few years, almost across the entire country, and that is a major part of the story,” said Johns Hopkins University researcher Abe Silverman.

Right now, the cost of grid upgrades is spread around. But Silverman said the challenge is to fence off some costs to avoid subsidizing technology companies with massive balance sheets.

Forcing ordinary customers to pay for tech giants’ power needs is “obviously immoral but also totally unpalatable politically,” Silverman said.

As more electricity is directed toward powering huge data centers, noted Tom Wilson of the Electric Power Research Institute, that scrambles assumptions around the fair allocation of cost. Decisions flow from a deeply complex matrix of state and federal authorities — not the White House.

Michael Jacobs, senior manager for climate and energy at the Union of Concerned Scientists, has estimated that in seven of the 13 Eastern states served by the PJM Interconnection’s high-voltage network of power lines, ratepayers will be charged at least $3.1 billion for grid expansions serving data centers, based on PJM’s 2025 spending plan.

“For 2025, Illinois gets a $637 million bill. Pennsylvania gets a $647 million bill. And it looks like Virginia gets a $1.4 billion bill,” Jacobs said. “And I’m just talking about seven states in PJM.”

To some degree, the tech companies’ agreement to supply their own power reduces the risk that so much additional demand overwhelms U.S. grids.

“The grid is stressed,” said Darryl Lawrence, the state consumer advocate in Pennsylvania. “Simply plugging in a very large hyperscaler data center that could be expected to use as much power as a medium-sized city or more is not in the best interest of reliability or the grid as a whole.”

But there may be only marginal political benefit for the president in an agreement that helps keep the lights on — an imperative ingrained as a federal obligation.

Why are the tech companies agreeing to this?

The agreement is clearly geared toward the biggest technology companies — the ones that can pay upfront costs for infrastructure.

The pact puts on paper some self-interested objectives: Trump is under pressure to address higher electricity prices, while electricity is essential for the major tech companies. Higher utility costs that hit American households could sour broader public support for an unbridled AI boom.

Many states already have created separate rate structures, known as tariffs, for large energy-consuming customers such as data centers. The details vary but often have included contractual commitments to prevent tech companies from shifting costs to everyone else. Those include provisions requiring tech companies to pay for most of the electricity they originally planned to use, even if their data centers do not materialize.

Those designs, however, are not guaranteed to capture all the costs. Tech companies have also tried to limit how much indirect cost to the grid they cover, said Sarah Friedman, co-founder with the Better Data Center Project, an organization promoting community engagement in data center development.

“How these costs are allocated is so complex,” she said. “It’s a new world, and some of our existing mechanisms don’t exactly work for this model.”

Companies such as Microsoft, Anthropic and Google have already made similar voluntary commitments to power their own data centers and strengthen the energy grid. Power giant Constellation Energy inked a 20-year deal with Microsoft in 2024 to restart the Three Mile Island nuclear power plant in Pennsylvania, adding electrons to the grid that would offset Microsoft’s data center power use.

“These negotiations have been going on for months,” the senior White House official said. “We’ve already seen things moving in this direction. This is, in a sense, formalizing and having all of the large developers formally commit to practices they’ve already been migrating towards, through cooperation with the administration.”

In Trump’s case, the pact makes the AI companies partners in responsibility for restraining consumers’ electricity costs. The tech companies joining with the president are in an all-out race to dominate AI services, and want a brand that is consumer friendly, not the opposite.

“We’ve never had large-load customers that had the resources and the profit margins, to be just really brutally frank here, to be able to pay their own way,” said Ryan Wiser, senior scientist at the Energy Department’s Lawrence Berkeley National Laboratory, speaking at a seminar this week.