Small businesses may end up subsidizing mammoth tech companies' AI data centers, according to a report from the Pennsylvania Sustainable Business Network.
There are more than 1 million small businesses in Pennsylvania that collectively employ 2.5 million people — about half of the state's private workforce.
The report said that segment of the economy typically operates on slim margins, and may not be able to absorb the higher electricity costs being driven by data center development.
The report cited a March Voice of Main Street survey that polled 247 small business owners across the country. It found 81% of small businesses saw utility bills increase over the last year. More than half raised their prices, and one in five froze hiring in response.
"Even a 10% increase in annual energy costs can have a significant impact on their ability to hire individuals and employ more people in the state, grow and expand their businesses, or in some cases just stay afloat, said the report's lead researcher Michael Jarrett.
The report notes that recent capacity cost increases in the PJM electric grid, which includes Pennsylvania, "is expected to translate into a 10–20% rise in residential electricity bills and up to a 29% increase for businesses."
Jarrett said small companies can't negotiate their energy bills the way large corporations can.
"There are plenty of ratepayer protections for residential consumers, especially for low-income individuals," Jarrett said, "but that doesn't really exist for small businesses. They're kind of in-between."
The report's authors are supportive of Gov. Josh Shapiro's GRID standards, which are meant to protect energy affordability and encourage community engagement on data center projects.
Jorge Luis Fontanez, who also worked on the report, said the state needs to make sure communities have the capacity to negotiate community benefit agreements.
"We do caution that mandating a negotiation without funding appropriate technical assistance does produce access without agency," Fontanez said.
He said small businesses should have a seat at community benefit negotiations. Fontanez said Pennsylvania's Office of Small Business Advocate has already intervened in utility rate cases, saving businesses money. He said the office could be expanded to help in bargaining.
The report said immediate support for small businesses could include energy bill assistance programs, tax credits for energy expenses above a certain threshold, and expanded energy efficiency grants.
It also emphasizes the role that clean energy can play in helping to bring down electricity prices. The report said renewables are the cheapest form of energy that can be added to the electric grid but structural issues within the regional grid prevent renewables from connecting quickly.
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