How Google is Reshaping a Small Oregon Town
Water, Power, and Tax Breaks in The Dalles’ Data Center Boom
The Columbia River Basin has become a hotspot for data centers, and it’s not hard to see why. Cheap electricity, plenty of open land, and high-speed fiber optics make it an ideal location for tech giants like Google and Amazon. The region generates more than 40% of the nation’s hydropower, and state tax incentives sweeten the deal by easing the financial burden on intangible assets.
Take Hillsboro, just outside Portland—it’s a prime example of this data boom. The city isn’t just home to a growing cluster of data centers; it also serves as a key landing point for trans-Pacific submarine cables, plugging the region into global digital networks. On the surface, that sounds like a win for everyone. More infrastructure, more investment, more connections to the world. But for the local communities that actually host these facilities? The reality is far less rosy.
Despite promises of economic development, the benefits don’t always trickle down. Data centers are built in rural areas, but they primarily serve far-off markets. They take up space, consume vast amounts of energy, and leave behind relatively few jobs. In many ways, it’s just another form of resource extraction—local communities provide the land and power, but the real gains flow elsewhere.1 And that raises an important question: What do these towns actually get in return?
Oregon Network and Geographic Context
Google in The Dalles
The story of The Dalles, Oregon, captures the double-edged nature of data center development—economic opportunity on one side, deep uncertainty on the other. When Lockheed Martin shut down its aluminum smelter, the town was in search of a new economic anchor. Google arrived in 2006 with the promise of jobs, investment, and a link to the high-tech economy. It seemed like a good deal at the time. But nearly two decades later, the reality is a little more complicated.
One major concern? Overreliance on a single employer. The memory of Lockheed Martin’s departure still loomed large, and while Google’s presence promised stability, it came at a cost. Since setting up shop, the company has secured hundreds of millions of dollars in tax breaks—all while employing just around 200 people. And it didn’t stop there. In 2021, Google announced plans to expand even further, proposing two new data centers. But there was a catch: the deal hinged on securing multiple 15-year property tax abatements through Oregon’s Strategic Investment Program. Local officials backed the expansion, in part because of Google’s proposal to help address The Dalles’ growing water concerns. In return for donating 35 acres and funding upgrades to the water system, the company secured access to an undisclosed amount of water for its operations. The plan involved tapping into groundwater rights and pumping treated water back into the aquifer—a move projected to triple the city’s water supply. On paper, it’s a win-win. More water, more infrastructure, more investment.
But not everyone was convinced. The Dalles sits along the Columbia River, yet water scarcity is a real and growing concern. Farmers, environmentalists, and Yakama Nation tribal fishers worried about the impact, especially on the Dog River, home to three endangered fish species. Tensions boiled over when Google refused to disclose just how much water it was using, sparking a battle over transparency. When The Oregonian/OregonLive requested public records on Google’s water consumption, the company and the city pushed back, calling the data a “trade secret.” Then things escalated—the city, with Google footing the bill, sued the newspaper to keep the information under wraps.
After a thirteen-month legal battle, Google and The Dalles backed down. They paid $53,000 to the Reporters Committee for Freedom of the Press and finally released the records. The numbers were staggering: between 2017 and 2021, Google’s water use had tripled, reaching 355 million gallons (1.34 million cubic meters) in 2021—nearly 30% of the city's total consumption (its 2023 usage went down to 305 million gallons.). And yet, after all the controversy, nothing changed. The lawsuit fizzled out, Google got its tax breaks in 2022, and by 2024, the company secured final approval for its AI-driven expansion. Two new data centers are now on the way, along with investments in water and sewer infrastructure.
The Impacts of Utility Changes
Google’s arrival in The Dalles didn’t just reshape the local economy—it fundamentally altered the Northwest Wasco County People’s Utility District (NWCPUD). Practically overnight, the tech giant became the utility’s biggest customer, injecting millions into the system but also creating a deep dependency. Before 2005, NWCPUD’s largest users were spread across five unnamed entities. When Google switched on its first data center in 2006, that number jumped to six, and the financial impact was impossible to ignore.
Between 2005 and 2009, energy sales to these primary customers skyrocketed from $1.4 million to $13.8 million. By 2009, Google alone was spending an estimated $12.4 million per year on power, consuming a staggering 330 gigawatt-hours—enough for 33,000 homes or three The Dalles. The trend continued—by 2015, the top five customers were responsible for 69% of all energy sales, generating $17.5 million in gross revenue. And though NWCPUD keeps Google’s exact numbers confidential, the pattern was clear: Google wasn’t just a major player; it was the player.
That level of reliance came with risk. Internal reports revealed that if Google were to pull out in 2018, NWCPUD’s net revenue could drop by $3.7 million, forcing an 18% rate hike on everyone else. The town’s power grid had been redesigned around a single company, and the price of that redesign wasn’t just financial—it was structural.
Rising Rates and Expanding Infrastructure
To accommodate Google’s growing demand, NWCPUD had to invest heavily in upgrades, and those costs didn’t come from thin air. Between 2016 and 2021, residential electricity rates climbed from $68.00 per megawatt-hour to $77.71 per megawatt-hour. That’s a noticeable increase, though it mostly followed inflation. Residential energy use, meanwhile, barely budged, rising from 129.3 gigawatt-hours to 133.0 gigawatt-hours.
Commercial and industrial users, however, were on a different trajectory entirely. In 2016, they accounted for $21.6 million in revenue, making up about 67% of NWCPUD’s income. By 2021, that figure had more than doubled to $48.3 million—now 81% of total revenue. The primary driver? Google, whose data center operations had expanded to five facilities, with a total investment of $1.8 billion. By 2023, total revenues for commercial and industrial sectors soared to $80.9 million, now 84% of all income. Residential revenues, meanwhile, barely moved, sitting at $11 million, or just 11% of the total.2 Even as residential rates ticked down slightly, the shift in energy demand was unmistakable.
To meet this massive growth, NWCPUD made significant infrastructure investments—new substations, upgraded transmission lines, and more robust power management systems. The scale of these upgrades is captured in the figure below, which shows the sharp rise in commercial and industrial revenues compared to residential users, alongside the utility’s growing capital assets.
Northern Wasco County People’s Utility District Sales and Fixed Capital 2004 to 2022
The Changing Energy Mix
For all the talk of sustainability, The Dalles’ energy supply had to evolve to keep pace with Google’s appetite for power. NWCPUD generates about 100 gigawatt-hours annually from its two hydroelectric plants—barely a drop in the bucket compared to what’s needed to run Google’s sprawling data centers. The real supply comes from outside sources, brought in through power purchase agreements (PPAs) and long-term contracts.
Between 2015 and 2024, NWCPUD’s energy imports surged to keep up with Google’s expansion. Contracts with the Western Systems Power Pool, Avangrid Renewables, and other providers totaled more than $88 million over this period. While some of this energy came from renewables, natural gas likely played a significant role in bridging the gap.
The numbers tell the story. In 2015, NWCPUD’s energy mix was 85% hydropower, mostly imported through the Bonneville Power Administration from the Federal Columbia River Power System. By 2023, hydropower’s share had dropped to 46.5%. The biggest change? A new category labeled “unspecified” regional energy sources—accounting for 47.4% of the total supply. Given the realities of the regional grid, it’s likely that a substantial portion of this comes from fossil fuels, particularly natural gas.
Google’s data center expansion in The Dalles
Considering the Trade-Offs of Powering the Cloud
The rise of data centers in The Dalles is a textbook case of how tech-driven development can reshape a local economy. On the surface, Google’s presence has injected billions into infrastructure, boosted utility revenues, and secured long-term energy contracts. But the costs—both literal and hidden—are hard to ignore.
The town’s power grid is now deeply tied to a single corporate customer, creating financial vulnerabilities that could be difficult to recover from if Google ever decides to scale back. Meanwhile, the energy mix is shifting in ways that challenge the region’s traditional reliance on hydropower. And for local residents, the benefits remain uneven—rates have gone up, but job creation has been minimal, and decisions about water and energy use are increasingly shaped by the needs of a single company rather than the broader community.
As The Dalles moves forward with Google's latest expansion, these questions remain: Who really benefits from this development? And at what cost?
References
Mahmoudi, Dillon, Anthony M. Levenda, and John G. Stehlin. 2020. “Political Ecologies of Platform Urbanism.” In Urban Platforms and the Future City, 1st Edition, 40–52. First Edition. New York: Routledge, 2020.: Routledge.
All data reported included in NWCPUD’s Financial Statements and Audits 2016–2023. These can be found at “Transparency.” 2024. Northern Wasco People’s Utility District. May 21, 2024. https://www.nwascopud.org/about-us/transparency/.
Brilliant reporting. This is why I come to Substack. Having seen those data centers in up the river in Boardman as well, and having grown up in a company town (coal and power station), I hope the county is putting the money to good use. It may not be around forever.
I lived in Oregon for over a decade and know this area. It's sad to see the corporate takeover and the threats to the environment. Thank you for putting together such a well-researched piece.