This is a really fascinating exploration of how data center build out, funded by debt, debt that relied on low interest rates, can then put pressure on interest rates, which then causes the utilities to raise their rates. It's beautiful.
It feels like this is a game between speculators that want low interest rates, and a money machine that wants to protect their investments in the stock market. If you work for Goldman for 30 years before joining the fed, then you surely have an interest in protecting the status quo.
Is there no other system we could envision that makes it possible for us to avoid these goliaths battling and destroying the planet and our opportunities to live in peace?
Eliminate investor owned utilities, and thereby a return on equity requirement. Until that happens, focus solar and battery deployments in the territories of investor owned utilities to drive down their profit until the economics collapse.
Solar and batteries will only keep getting cheaper, and will eventually consume any ability to profit from providing electrical service at the local level. Could be five years, could be fifteen years. Hard to say while we watch the world absorb annual solar and battery production year over year.
TLDR Every investor owned utility is a target to sunset, proceed accordingly. You have to cut out the middleman.
Does this really solve the problem? The article said that municipal bond costs are higher too. Buying up these companies will take a lot of capital. Cities will need to raise money somehow to pay for electrical grid investments and equipment. Even publicly owned companies work hire private ones which means needing to pay them.
Cutting out the investor owned utility and their return on equity is the goal. It is unlikely cost of capital to a coop or municipality in the bond market is so high compared to an investor owned corporate entity and their profit seeking that the math doesn’t pencil out.
Each entity is still borrowing, the investor owned utility demands a profit cut on top of the borrowing. That’s where you’re saving, the rake and skim. Eminent domain can be used if required to acquire infrastructure at fair market value, although I argue you want to push investor owned utilities into distress to buy at more favorable prices.
https://news.ycombinator.com/item?id=48756314 ("This is amazing. As the govt grid becomes costlier, wealthier households buy batteries and disconnect, this creates a virtuous cycle of increasing costs, making solar+battery the cheapest source of energy.")
In the short term, no, they were a jobs, climate mitigation, and wholesale energy cost story. On the longer story arc, yes. Renewables and batteries are currently driving down wholesale power rates, and as their prices continue to fall, retail consumers will be able to buy them at scale, and if necessary, go off grid and be self sufficient.
Similarly, jurisdictions can move towards a self owned coop model. Ann Arbor, Michigan is in the process of this as an example. Local governments and electric coops can go to the capital markets for funding via bond issues, at more favorable terms than investor owned utilities (muni bonds, in may circumstances, have tax advantages for investors). Cutting out the profit and equity return are resources that can be used for grid investments or reductions in cost to coop members. They usually already own their water and sewer systems, so this is not new territory, simply a different utility system.
Your comment demonstrates you did not read the piece. Higher interest rates are pushing investor owned utilities to ask for higher returns on equity. This pushes up electricity costs to retail consumers who cannot simply "destroy demand" for the baseline electricity they need. It is a reinforcing feedback loop for those exposed to investor owned utilities who can keep asking for returns coming out of retail electricity user pockets.
> Higher interest rates drive demand destruction. There doesn't need to be a credit shock to reduce inflation.
Only when demand is elastic. If demand is non discretionary and inelastic, demand is not destroyed. People still need to drive to work, and will pay for their fuel tank until the cost exceeds some threshold, for example. Same for electricity. Same to ship goods via modes of transportation that rely on diesel fuel. This is also a core component of what is driving inflation higher over the last six months, inflation the Federal Reserve and interest rates are powerless to reduce.
> Your comment demonstrates you did not read the piece. Higher interest rates are pushing investor owned utilities to ask for higher returns on equity.
More like, your comment demonstrates insufficient understanding of asset markets, because nobody should care what "investor owned utilities" are asking for. If my stocks are underperforming I don't go cry to the government to allow my holdings to charge more. Do you know what options those investors have, or I should tell you that too?
Yes I read the piece, I agree that higher power prices reportedly due to higher interest rates would be bad for consumers. However power prices going up are due to a number of factors. You haven't addressed the "Inflating the AI bubble" from the title, it's not in the article at all. The "they have begun their interest rate hikes again, though they are keen to pause at any point that the AI bubble wobbles", isn't about inflating the bubble.
> However power prices going up are due to a number of factors. You haven't addressed the "Inflating the AI bubble" from the title, it's not in the article at all.
Right, that's one of the factors and it wasn't addressed.
> The "they have begun their interest rate hikes again, though they are keen to pause at any point that the AI bubble wobbles", isn't about inflating the bubble.
I don't know how you reached that conclusion, because to me, it sounds like saving the bubble isn't meaningfully different from inflating it.
Eww... economically illiterate demagoguery under the guise of this is good/bad for 'ordinary people'. Maybe Matt would be happier if they used Erdogan's Monetary policy and the hyperinflation because he thinks the time opportunity cost should be zero.
This is a really fascinating exploration of how data center build out, funded by debt, debt that relied on low interest rates, can then put pressure on interest rates, which then causes the utilities to raise their rates. It's beautiful.
It feels like this is a game between speculators that want low interest rates, and a money machine that wants to protect their investments in the stock market. If you work for Goldman for 30 years before joining the fed, then you surely have an interest in protecting the status quo.
Is there no other system we could envision that makes it possible for us to avoid these goliaths battling and destroying the planet and our opportunities to live in peace?
Eliminate investor owned utilities, and thereby a return on equity requirement. Until that happens, focus solar and battery deployments in the territories of investor owned utilities to drive down their profit until the economics collapse.
Solar and batteries will only keep getting cheaper, and will eventually consume any ability to profit from providing electrical service at the local level. Could be five years, could be fifteen years. Hard to say while we watch the world absorb annual solar and battery production year over year.
TLDR Every investor owned utility is a target to sunset, proceed accordingly. You have to cut out the middleman.
https://www.arcgis.com/home/item.html?id=a249744f9f5e494d917...
https://www.electric.coop/
https://en.wikipedia.org/wiki/Investor-owned_utilities_in_th...
Does this really solve the problem? The article said that municipal bond costs are higher too. Buying up these companies will take a lot of capital. Cities will need to raise money somehow to pay for electrical grid investments and equipment. Even publicly owned companies work hire private ones which means needing to pay them.
Cutting out the investor owned utility and their return on equity is the goal. It is unlikely cost of capital to a coop or municipality in the bond market is so high compared to an investor owned corporate entity and their profit seeking that the math doesn’t pencil out.
Each entity is still borrowing, the investor owned utility demands a profit cut on top of the borrowing. That’s where you’re saving, the rake and skim. Eminent domain can be used if required to acquire infrastructure at fair market value, although I argue you want to push investor owned utilities into distress to buy at more favorable prices.
Electric utility death spiral: Revisited in the context of tariff design - https://ui.adsabs.harvard.edu/abs/2022ElecJ..3507062A/abstra...
(an early example of this at nation state scale is Pakistan)
Pakistan's solar miracle – how the hell did they do it? - https://news.ycombinator.com/item?id=48755738 - July 2026
https://news.ycombinator.com/item?id=48756314 ("This is amazing. As the govt grid becomes costlier, wealthier households buy batteries and disconnect, this creates a virtuous cycle of increasing costs, making solar+battery the cheapest source of energy.")
Pakistan: The solar revolution nobody planned - https://news.ycombinator.com/item?id=48618360 - June 2026
Pakistan's solar surge lifts it into rarefied 25% club - https://news.ycombinator.com/item?id=47653908 - April 2026
HN Search: Pakistan solar - https://hn.algolia.com/?dateRange=all&page=0&prefix=true&que...
Funny, I was going to ask "is it as simple as going off the grid"?
It makes the Biden and Obama solar subsidies look very different. Indirectly they were protecting us from private profiteering utilities?
In the short term, no, they were a jobs, climate mitigation, and wholesale energy cost story. On the longer story arc, yes. Renewables and batteries are currently driving down wholesale power rates, and as their prices continue to fall, retail consumers will be able to buy them at scale, and if necessary, go off grid and be self sufficient.
Similarly, jurisdictions can move towards a self owned coop model. Ann Arbor, Michigan is in the process of this as an example. Local governments and electric coops can go to the capital markets for funding via bond issues, at more favorable terms than investor owned utilities (muni bonds, in may circumstances, have tax advantages for investors). Cutting out the profit and equity return are resources that can be used for grid investments or reductions in cost to coop members. They usually already own their water and sewer systems, so this is not new territory, simply a different utility system.
"Your margin is my opportunity."
https://www.detroitnews.com/story/news/local/michigan/2026/0...
https://www.mlive.com/news/ann-arbor/2026/09/what-would-publ...
https://ourworldindata.org/data-insights/solar-panel-prices-...
https://ourworldindata.org/battery-price-decline
https://www.energy.gov/cmei/systems/sunshot-2030
Here is a related, somewhat biased but way more entertaining video on how utility pricing works.
https://www.youtube.com/watch?v=3fDGcZ8qpPM
Where is the "Inflating the AI Bubble" part? Clickbait.
Higher interest rates drive demand destruction. There doesn't need to be a credit shock to reduce inflation.
Your comment demonstrates you did not read the piece. Higher interest rates are pushing investor owned utilities to ask for higher returns on equity. This pushes up electricity costs to retail consumers who cannot simply "destroy demand" for the baseline electricity they need. It is a reinforcing feedback loop for those exposed to investor owned utilities who can keep asking for returns coming out of retail electricity user pockets.
> Higher interest rates drive demand destruction. There doesn't need to be a credit shock to reduce inflation.
Only when demand is elastic. If demand is non discretionary and inelastic, demand is not destroyed. People still need to drive to work, and will pay for their fuel tank until the cost exceeds some threshold, for example. Same for electricity. Same to ship goods via modes of transportation that rely on diesel fuel. This is also a core component of what is driving inflation higher over the last six months, inflation the Federal Reserve and interest rates are powerless to reduce.
> Your comment demonstrates you did not read the piece. Higher interest rates are pushing investor owned utilities to ask for higher returns on equity.
More like, your comment demonstrates insufficient understanding of asset markets, because nobody should care what "investor owned utilities" are asking for. If my stocks are underperforming I don't go cry to the government to allow my holdings to charge more. Do you know what options those investors have, or I should tell you that too?
Yes I read the piece, I agree that higher power prices reportedly due to higher interest rates would be bad for consumers. However power prices going up are due to a number of factors. You haven't addressed the "Inflating the AI bubble" from the title, it's not in the article at all. The "they have begun their interest rate hikes again, though they are keen to pause at any point that the AI bubble wobbles", isn't about inflating the bubble.
> However power prices going up are due to a number of factors. You haven't addressed the "Inflating the AI bubble" from the title, it's not in the article at all.
Right, that's one of the factors and it wasn't addressed.
> The "they have begun their interest rate hikes again, though they are keen to pause at any point that the AI bubble wobbles", isn't about inflating the bubble.
I don't know how you reached that conclusion, because to me, it sounds like saving the bubble isn't meaningfully different from inflating it.
Eww... economically illiterate demagoguery under the guise of this is good/bad for 'ordinary people'. Maybe Matt would be happier if they used Erdogan's Monetary policy and the hyperinflation because he thinks the time opportunity cost should be zero.
Or... "how humanity fell for yet another promise of Lucy's to not yank the football away" if you just follow orders
From religions promise of forever life with your loved ones to "starts a SaaS! Disrupt!"
All just political ploys of the elite class of the day. Cause the kids stupid lizard brains take decades to figure it out
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