Blackstone’s AI Power Grab Faces Federal Scrutiny
Public Citizen News / July-August 2025
By Patrick Davis
This article appeared in the July/August 2025 edition of Public Citizen News. Download the full edition here.
The future of artificial intelligence might hinge not just on chips and code, but on who controls the power to keep it all running. In Virginia, where hulking data centers loom like sealed fortresses on former farmland, a regulatory battle over a single gas-fired power plant hints at an approaching storm over energy monopolies, and the price our climate will be forced to pay for AI’s rapid development.
Earlier this year, Public Citizen challenged a move by the private equity firm Blackstone to acquire an 800 megawatt gas-fired power plant just outside of Washington, D.C. The plant, located in Virginia’s Loudoun County, sits close to numerous power-hungry data centers, making it a potentially profitable acquisition for the massive private equity firm.
The acquisition is also part of a disturbing trend for energy customers across the country: large private equity firms have been purchasing land, data center companies, and power plants near major data center hubs to set themselves up to profit from a boom in AI usage that could create a run on energy across the United States.
The $1 billion proposal by Ares Management to sell the 800 MW Potomac Energy Center in Loudoun County, Va., to Blackstone raises concerns about anti-competitive practices by the world’s largest investment management company. (Blackstone’s CEO, Stephen A. Schwarzman, is a close confidant of President Trump and made $1 billion just last year alone.)
In Virginia — home to more than 25% of the entire data center capacity of the United States — Blackstone controls as much as 1,000 MW of the data center load.
In its attempt to take control of the gas power plant, Blackstone omitted its role in the data-center boom in a filing with the Federal Energy Regulatory Commission (FERC).
“Blackstone’s lawyers have argued that FERC has no current authority to assess an applicant’s control over data centers,” Tyson Slocum, director of Public Citizen’s Energy Program told a subcommittee of the U.S. House of Representatives Committee on Oversight and Government Reform in April. “Then last summer, FERC was caught off guard when 30% of Virginia’s data centers suddenly went offline with a resulting surge in electricity nearly causing a blackout.”
Projections of exactly how much power will be required to meet the future needs of AI are wildly scattered. At the April hearing, Slocum emphasized that forecasts of massive infrastructure investment—spurred by surging data-center growth—risks leaving consumers and taxpayers burdened with energy capacity beyond what will be needed to power AI. He warned of repeating the pattern seen in the early 2000s, when electricity forecasts severely overestimated actual demand due to unanticipated efficiency gains.
“Energy use per computation has decreased by 20% every year since 2010,” said Slocum. “There are ample opportunities to require or encourage data centers developing generative AI to pursue energy demand management programs, limiting the need for expensive new energy generation infrastructure.”
“I’m very concerned that President Trump’s decision to use emergency powers to usurp state and local laws will force taxpayers and ratepayers to cover the cost of hastily implemented energy infrastructure,” added Slocum. “Federal energy regulators seem to lack adequate authority to ensure that the demand for data center energy will not disrupt the current demand by homes and businesses.”
As part of Public Citizen’s filing with FERC, Slocum asserts that Blackstone’s application to FERC omits critical data, including the private equity firm’s substantial ownership of the data centers.
Over the past year, two alarming grid disruptions—in July 2024 and in February 2025—triggered a sudden shutdown of 1,500 MW and 1,800 MW of data‑center load, respectively.
“These disturbances nearly triggered cascading blackouts in PJM’s ‘data‑center alley’ around Loudoun and Fairfax counties,” said Slocum. “If Blackstone were to own the power plants providing energy to these data centers, the risk of anti‑competitive and abuse of consumer protections is very real.”
Hypothetically, Blackstone could manipulate energy markets, shifting its significant control of regional data center load away from its longtime consumers and moving it to power data centers.
In its filings with FERC, Blackstone doesn’t deny owning significant data center capacity in Virginia. But the private equity firm has neither confirmed exactly which data centers it owns, nor stated the load size in megawatts of such facilities, let alone divulged whether it is in the process of building additional data center capacity in the region.
In May, the company announced it would buy TXNM Energy, a monopoly utility in New Mexico and Texas with 800,000 customers whose only option is to buy electricity from the utility. The company already has controlling interests in the utilities FirstEnergy and Northern Indiana Public Service Company, and owns a huge fleet of fossil fuel power plants across the country, along with 7,000 miles of Tallgrass Energy’s pipelines.
“Data centers consume so much energy because they’re filled with millions of microprocessors that are doing millions of computations each minute,” said Slocum. “As the use of AI expands, data centers should have to improve the energy efficiency of these facilities and of these microprocessors. There are ways we can ensure an AI future doesn’t accelerate climate change or drive up energy prices for consumers, but we need the companies to take measured steps today to ensure those protections.”