Artificial intelligence leader Anthropic has raised concerns with investors about the impact of data centers competing for natural gas, which could lead to increased fuel prices in certain regions.
This alert was included in its Form S-1 registration statement, filed with the Securities and Exchange Commission (SEC) as part of its initial public offering plans on Monday.
The company noted that as more data centers depend on natural gas for energy, and because some jurisdictions have specific regulatory frameworks that limit certain onsite arrangements, there’s going to be heightened competition for natural gas supplies and pipeline capacity in those selected areas.
Anthropic expressed that this competition could cause natural gas prices to rise, potentially complicating their ability to secure reliable fuel supply contracts and pipeline connections necessary for their facilities. Interestingly, some of their proposed data centers will use on-site gas-fired generators.
This setup presents risks, as it makes them vulnerable to “fuel price volatility and supply disruptions that are beyond our control.” Moreover, Anthropic mentioned that they usually cover these fuel costs on a pass-through basis without any caps.
In the same section of their S-1, they indicated a commitment to covering increased electricity costs for consumers arising from their data centers. However, they haven’t made a similar promise regarding natural gas prices.
They cautioned that they might struggle to obtain stable gas supply and transportation during facility development, which could delay or even lead to abandoning planned sites. Notably, a previous draft submitted to the SEC in June acknowledged fuel price volatility at gas-fired sites, but didn’t mention competition affecting prices.
Paul Cicio, president and CEO of the Industrial Energy Consumers of America, pointed out that pipeline limitations are already restricting gas availability for manufacturers. He urged Congress to pass the Senate’s energy permitting bill.
A forecast from RBC Capital Markets suggests that gas consumption by data centers could rise dramatically, potentially reaching around 6.1 billion cubic feet per day by 2030. This represents almost a 20 percent increase compared to recent years’ averages for gas used for power generation.
Major tech firms have signed the “Ratepayer Protection Pledge,” which is a non-binding commitment to cover the entire cost of power and infrastructure needed for their data centers. Yet, the bank highlighted that these commitments lack specific details regarding enforcement, leaving some regulatory uncertainty.
Additionally, the Ratepayer Protection Act—designed to ensure data centers contribute to covering costs—passed the House but was met with hurdles in the Senate. This proposed legislation would require state regulators and utilities to include standards in their considerations, making large data centers responsible for the generation and grid upgrades fueled by their operations.
The level of protection for households varies, as the actual effect would depend on whether regulators agree to function under this standard. There is a call for more definitive action from Congress rather than mere voluntary commitments.
Senator Martin Heinrich expressed the necessity for legislation with real enforcement capabilities, while Senator Jon Husted, who sponsors the bill, is looking for alternative pathways to advance it amidst the upcoming elections.
