POLICY & POWER
As data centers multiply, utilities and consumer advocates are at odds over who should cover the cost of the transmission lines and substations needed to serve them.
BY THE EDITORIAL DESK very new data center campus eventually needs more than land and a lease; it needs power delivered at scale, and often that means new substations and transmission upgrades. The question of who pays for that infrastructure has become one of the most contested issues in utility regulation, according to filings in several states with heavy data center growth.
Regulators in a number of jurisdictions are now considering new tariff structures specifically for large, high-density customers like data centers, according to public commission dockets. Observers caution that outcomes vary significantly by state, utility structure, and the specific terms of interconnection agreements, and that no single national standard currently governs the allocation of these costs.
E Utility companies generally argue that large customers requesting significant new load should bear the costs tied directly to their service, through special tariffs or contribution-in-aid-of-construction charges. Representatives of several utilities have said in regulatory proceedings that this approach protects other ratepayers from subsidizing infrastructure built primarily to serve a single large customer.
Consumer advocates counter that utilities sometimes spread the cost of grid upgrades across their entire customer base through general rate cases, meaning households and small businesses could end up paying a share of infrastructure built to serve data centers. Advocacy groups in several states have asked regulators to require clearer accounting of which upgrades are driven by large new loads.