United States Representative Riley Moore has put his support behind a congressional bill known as the Ratepayer Protection Act. This comes on the heels of PJM Interconnection and other grid infrastructure entities strongly urging that companies constructing large load data centers pay the cost of the expanded infrastructure needed to serve power needs everywhere.
A major issue lies in the capacity and age of the grid of transmission lines connecting power plants and other electricity generation facilities to residential, commercial, government, and other users.
Transmission infrastructure was built well over capacity by the 1980s and has not expanded much since. Over the past 40 years, residential electric demand has risen sharply. Most homes and many schools lacked air conditioning units as late as the 1980s. Similarly, high capacity personal computers and smart television sets have driven demand higher as well.
Many of the towers also have reached advanced age. In a government affairs update from the West Virginia Farm Bureau recently, Dwayne O’Dell, representing WVFB, shared an example of too many towers in the Kanawha Valley region that date back to the World War II era. With one of the most productive coal-fired power plants anywhere on Earth in the Kanawha Valley, the reliability of towers there is paramount for the entire PJM Interconnection system.
On the commercial side, significant growth in manufacturing in the United States in recent years paired with the emergence of large load data centers and cryptocurrency facilities has pushed grid capacity to shrinking margins of error. The PJM Interconnection system, which includes West Virginia, its surrounding states, and others west to the Mississippi River, could see peak capacity shutdowns by 2030 if power generation and transmission capacity does not expand rapidly.
With data centers generating revenues analogous to power consumption, many feel they can handle the burden of paying for their capacity needs.
A release by Representative Moore stated that the bill, if passed, will “require state public utility commissions to consider standards ensuring that large data centers pay the full incremental costs associated with generation, transmission, and distribution upgrades needed to serve their electricity demand.”
He added that “West Virginia families and American taxpayers should not be forced to foot the bill for massive data centers, and the enormous potential demands they place on our power grid.” The legislation would maintain “state and local control over data center projects while ensuring that hardworking Americans are not asked to pay for hundreds of millions of dollars in new generation, transmission, or distribution infrastructure costs. That cost should always be on the companies.”
This comes as the Trump Administration is at the same time pushing for data center construction, but also tighter standards for handling data center and crypto large loads in the transmission system. The Federal Energy Regulatory Commission (FERC) ordered the North American Electric Reliability Corporation to develop regulatory standards for these loads and mitigate their effects on the grid.
Also, according to the trade publication Grid Brief, First Energy has proposed to FERC that data centers “pay for transmission upgrades needed to bring them online, rather than spreading those costs across existing customers.” It grafts a policy from the natural gas industry “where new customers can pay incremental rates for new infrastructure instead of asking legacy customers to finance the expansion.”
Also “under First Energy’s plan, data centers would sign 15-year contracts, provide collateral, pay the normal zonal transmission rate for the existing system, and then pay an additional expansion rate for new facilities built because of them.”
That said, the trend seems to be moving away from major data center facilities relying on the grid. West Virginia Governor Patrick Morrisey backed legislation to allow microgrid on site production for major consumers. A microgrid could generate power in a variety of ways from nuclear to solar. State measures also included using three percent of tax revenues collected from data centers to .
According to Utility Dive, a trade publication, “about a third of all U.S. data centers are expected to run entirely on onsite power by 2030.” An industry survey showed that 61 percent of the time a company would build its own source of power rather than relying on a bottlenecked grid.
PJM Interconnection last month also introduced proposals to mitigate the burdens placed by data centers on the grid. It will create a “large load registry” of customers typically using 50 megawatts or more of power. Government officials would have access to this list. This allows for more effective peak demand period planning in allocating power.
Additionally, PJM proposes that during peak demand periods they be permitted to establish “a new emergency procedure (that) would notify utilities to reduce or transfer the electricity demand from new Large Load customers ahead of any action that would shut off traditional consumers, including residential consumers.”
During such periods, large load data centers and other facilities would have to rely on their own generators or other resources to sustain them until PJM could allow their safe reconnection to the grid.
