Protect Ratepayers from the Risks of Data Center Uncertainty

Despite the push to develop energy infrastructure to meet data center demands, there remains significant uncertainty about whether demand projections will materialize. This introduces significant risk that developers will pull out of deals early, leaving communities to shoulder the costs of infrastructure rapidly built to serve data center needs. States can protect against this risk by instituting strong compliance laws (also referred to as “compliance tariffs”) that insulate ratepayers from the risks of speculation and overprojection.

Develop Separate Rate Classes for Large-Load Customers

A large-load customer should be defined as a customer that uses or is able to use more than 20 megawatts (MW). A separate rate class for these customers should then be established. There are several ways to establish this separate rate class.

In some states, utilities have solicited approval from the Public Utility Commission (PUC) to create a new rate class specifically for data centers (or more broadly “large-load customers,” which are typically defined in such a way to apply almost exclusively to data centers, but designated via the amount of power used).

Advocates could also petition the state PUC to open such a proceeding in situations where the utility has not been proactive. 

Utility rate cases may also provide an opening to advocate for the creation of a separate tariff class for large loads.