Data centers would have to pay for their own infrastructure costs
The settlement, which remains subject to approval by the Pennsylvania Public Utility Commission, is between PPL Electric and more than a dozen intervenors that include the state consumer advocates, environmental and community groups like the Energy Justice Advocates, and larger power users like Walmart.
It marks the first time a Pennsylvania utility agreed to shield the average ratepayer from data center costs. In doing so, the settlement creates an entirely new customer rate class for large load data centers, which use extremely large amounts of electricity, and which would abide by different rules than all other classes. The agreement would also protect residential ratepayers from stranded costs, should an operator decide not to complete a planned facility.
EarthJustice attorney Devin McDougall, who represents the Energy Justice Advocates, applauded the agreement with PPL.
“It contains important protections for ratepayers and the reason that we need those protections is that we’re seeing an unprecedented spike in demand for electricity, and that’s really gonna drive up costs for utility service,” McDougall said. “We need a very clear rule that data center customers need to pay for the infrastructure costs that would not be incurred, but for their interconnection. The settlement contains an important mechanism for doing that.”
The new large-load rate case outlined in the pending settlement would apply to new facilities that would use more than 50 megawatts at peak demand. It would also include multiple facilities with a combined peak demand of at least 75 megawatts within a 10-mile radius. The voltage sent to these large load data centers is high — at or above 69 kilovolts.
These extremely high usage customers would also need to commit to operating for 10 years, or face penalties.
“[This is] designed to reduce the risk that other customers could be left paying for infrastructure costs if a large customer scales back or exits after only a few years,” said PPL spokesperson Dana Burns in an email.
If approved, PPL would also be the first utility to require large-load data centers to contribute to the pool of funds that help low-income customers through the Customer Assistance Program and the Low-Income Usage Reduction Program.
“This new rate class will provide $11 million in support for the residential low-income program, helping reduce costs for residential customers, and includes safeguards to manage increased demand from large load customers,” reads a statement released by PPL.
These payments, known as universal service costs, have up until now, been borne solely by residential customers in Pennsylvania.
The Public Utility Commission’s Vice Chair Kimberly Barrow commented as part of the proceeding that due to the rising costs associated with the growth of data centers, more customers are in need of assistance. Barrow said that since the data centers have caused rates to rise, they should also pay to compensate low-income ratepayers rather than place the burden on other residential customers. Those additional costs were estimated at $11 million.