Utility regulators weigh new rates for AI, data center demand

By EPN Staff

Growing electricity demand, sparked in part by a predicted boom in energy-hungry artificial intelligence, has state regulators considering higher rates and other significant changes meant to ensure data centers and other large energy users pay for the infrastructure they need instead of spreading those costs amongst existing customers.

In South Carolina the governing board of the state-owned utility, Santee Cooper, voted unanimously last month to charge new large customers higher rates as part of a 4-year pilot program.

A similar debate is playing out in Louisiana, where ratepayers are worried three new natural gas plants meant to support Meta’s planned $10 billion datacenter will raise other customer bills.

Why it matters

Faced with increasing energy demands and public backlash against rate increases, regulators are searching for ways to protect current customers from higher bills.

These debates don’t just pit residential ratepayers against large tech companies – existing large users are also involved. Walmart is the largest electricity buyer in a number of states and has raised concerns in Louisiana that the new power needed for Meta’s data center campus will raise rates across the board.

The bigger picture

Multiple states have dealt, or are dealing, with these issues, including:

• In Virginia, Dominion Energy has asked the State Corporation Commission to create a new rate class for large-load customers, including data centers.
• In Indiana a November settlement requires major data center companies with plans to build in the state to make annual payments supporting programs for low-income customers.
• Georgia’s Public Service Commission approved a plan in January that allows Georgia Power to charge new customers that use more than 100 megawatts a higher rate.
• In Ohio tech companies struck a deal with the utility company that would require new data centers larger than 25 MW to pay for at least 85% of the energy they expect to need each month, even if they use less.

Additional details

South Carolina is a state to watch on this issue as it grapples with a predicted energy deficit, in part because it’s well-situated for new data center sitings.

Alphabet and Meta, Google and Facebook’s parent companies, plan data centers in the state, which is “well-positioned along the Eastern Seaboard, offering decent access to metro areas in Atlanta, Charlotte, Washington D.C., and even New York via fiber routes,” RCR Wireless News reported in April.

“It is close enough to Virginia Beach, a hub for transatlantic data traffic via new high-capacity submarine cables and far enough from the coast to be shielded from hurricanes, earthquakes, and other natural disasters,” RCR said.

“It has also, until now, offered relatively competitive electricity rates, particularly when compared to other states on the East Coast.”