Little town Loyalton is about as far away from the AI revolution as you can get.
Tucked into Sierra Valley, along the northern edge of the Tahoe National Forest, this California town has remained remarkably affordable compared to its neighbors. Anti-government sentiment is common here. Signs like “Peeping Toms stay out,” and others express sympathy for the State of Jefferson, the anti-California separatist movement.
There is not a lot of talk about AI, the best way to use it or how to invest in it.
Yet tiny Loyalton, affectionately known by its own residents as the “loneliest town in America,” is about to pay the price for AI robber barons’ rapacious appetite for power.
The worst part: Many residents don’t even know.
Rapid Acceleration
There has been some media attention to a power grab. Basically Nevada, which has been blessing data centers at a rapid pace, has for decades supplied a significant amount of power to the Lake Tahoe region, including the California side.
Now, with new power needs expanding rapidly in the state, NV Energy, Nevada’s major electric supplier, has told Liberty Utilities, the California utility supplying the region, to find a new source of power.
So far most of the stories focus on the irony of Tahoe residents being affected. It’s a beautiful luxury area where Silicon Valley tycoons vacation, skiing in the winter, lake life in the summer. Among other oligarchs, Meta’s Mark Zuckerberg has a home in the very area that Liberty Utilities supplies. The story goes that those building AI will be affected in this transition.
That’s one part of the story. More important, to me, is the story of those who never asked for AI in the first place. This group — including Loyalton’s 700 or so residents — could now be priced out of energy, as data centers continue to consume more power. NV Energy estimates just 12 proposed data center projects could require almost three times the amount of energy the Hoover Dam can generate.
Little Information
If you drive into Loyalton, you might miss it. You’d drive past the Golden West Saloon, Leonard’s, a small grocery shop and a service center. Cattle roam free, the July 4th picnic brings everyone together and the handful of other restaurants in town are seasonal.
Towns like this dot the region, outside of the better known Lake Tahoe area. It’s a beautiful area and I’m lucky to have family there.
Having heard the story about Nevada pulling its power, I called a family member in Loyalton who is dependent on Liberty Utilities and asked if he knew whether it would affect him.
He hadn’t heard anything about it.
He is not an incurious person, either. He’s a retired journalist. He works in the hardware store in town. He went to the hardware store to ask if they had heard. No, he reported back to me, he was breaking the news.
Like most of America, as we transition into more tech, old school reporting has been harder to get. He says he knows the one woman who covers the town. He wasn’t sure if she knew.
But even if she had, few are reading the reporting. All of that’s to say, that like many others, the first sign of this “energy transition” they never asked for will most likely be in their power bill.
Drunk on Power
California regulators don’t have power over Nevada regulators, so there’s a predicament forming.
Nevada has been trying to attract more business. The Tahoe-Reno Industrial Center in Storey County has become one of the largest industrial parks in the world, bigger than Denver. The state has attracted Switch, Microsoft, Google and Apple data centers and Tesla’s Gigafactory. The state has even sweetened the pot by offering tax incentives — all in the service of projects that could end up raising consumer prices.
Nevada Governor Joe Lombardo, Republican, a former Sheriff, broke ground on a $4.6 billion, 2 million square foot data center that they claim will employ 1500 in construction jobs. Which is true but temporary. Long-term expectations are that the data centers would employ about 100.
The pull on resources though wouldn’t go away. Data centers are consuming vast amounts of energy, but many are also a suck on water, a precious resource especially considering the fire that swept through the area last week.
Reno’s own city council, for many of the above reasons, issued a moratorium on data centers, which Governor Lombardo has said he hopes they will lift.
Before the anti-data-center backlash, Republicans and Democrats were blessing data center investments as a sign of progress. President Trump just Monday said if communities don’t bless data centers they’ll end up “backwards and poor.”
The Price That Could be Paid
Loyalton has always been a town that’s worked to punch above its weight. It has fought with governments before. In 2013 the town pulled its employees out of CalPERs, the state’s retirement fund, because they couldn’t afford the payments. CalPERs responded with a $1.6 million termination fee, against a town with a budget of $1 million total. Loyalton refused to pay, so retirees ended up with pensions cut by more than half.
I remember an early visit to Loyalton. This one was treacherous, snow had blanketed the region. We had to put chains on our tires and still the drive was epic. (Coming from Illinois, I’ve always wondered why we can’t plow the highways in the region).
When we finally got into Loyalton and went to get the chains removed from the service center, the technician took one look at us. “You’re not from around here, are you?” he asked.
The town is mostly ranchers, farmers, retirees who like the quiet pace and low costs. Far from the AI creators and consumers, many who might gravitate to the Tahoe area.
But unless something changes, these farmers and ranchers and rural Americans, who are trapped sometimes unwittingly in this energy battle, will have to pay the price for this new technology they never asked for.
…searching for impact of DC’s in each State. Can’t tell if the story you relate is typical, what common issues impact them, etc
Thank you