By the end of the decade, Oregon’s electricity usage is expected to skyrocket due to power-hungry data centers. This extraordinary increase in energy demand may also result in higher home power bills.
Therefore, in order to provide Oregon regulators more power to shield residential consumers from the expenses of serving Big Tech, state lawmakers are drafting legislation for the next session.
Rep. Pam Marsh, a Democrat from Ashland, who is drafting the proposal, stated that the people who use the most energy should be responsible for paying for it. This is really a simple matter of consumer protection.
Although Oregon has rules in place to ensure that all customer classes pay their fair part, state regulators claim that those measures did not account for the fact that data centers require a greater amount of power than electrical customers.
In addition to data centers, Oregon’s energy consumption is expected to skyrocket in the upcoming years due to a move away from fossil fuels and toward electric appliances, machines, and cars.
The goal of the law is to guarantee that the majority of the costs associated with new power plants and transmission lines that supply the IT sector are borne by data center operators.
In only the last four years, power rates in the Portland area have increased by about 50%, and Oregon’s home electricity customers are already feeling the effects of a string of rate hikes.
Marsh stated that her proposal, now known as Legislative Concept 1547, is being prepared in response to the unique issues that data centers are generating in Oregon, one of several states considering similar legislation in reaction to the proliferation of data centers.
Data centers already account for over 10% of Oregon’s total electricity use. By the end of the decade, power planners predict that tech businesses’ power use would treble, if not triple.
According to industry insiders, the forecast’s high end is likely, which means that by 2030, data centers in the Northwest may use almost as much electricity as all of the households in Oregon and Washington do now.
Artificial intelligence and energy-intensive computing, which make sophisticated data analysis possible, are driving all of this.
Because of the state’s very generous tax incentives, Oregon has one of the biggest data center markets in the country. In the next years, Oregon’s wealthy tech businesses stand to save billions of dollars in local property taxes.
The Oregonian/OregonLive obtained an early draft of LC 1547, which would require the Oregon Public Utility Commission to establish a new category of utility customers for industrial establishments with a minimum base load of 25 megawatt hours.
In addition to ensuring that large power contracts do not result in higher costs or risks for ordinary retail electricity consumers, the Act would explicitly grant the commission the ability to allocate the costs of supplying those large energy customers to other customers.
It would also require those large customers to pay a minimum percentage of those electricity expenses and to commit to 10-year power contracts. This clause is meant to make sure that big tech corporations pay for new power plants and transmission lines, even if they end up using less electricity than they had originally projected.
The director of the Oregon Citizens Utility Board, which represents home energy consumers, Bob Jenks, stated, “We believe it is a good bill.” This would enable the costs to serve data centers to be allocated to the data centers since rate classes are the mechanism that is used to assign charges.
Investor-owned utilities that supply electricity to data centers in Prineville and Hillsboro, like as PacifiCorp and Portland General Electric, are subject to LC 1547. Electric cooperatives that serve Google in The Dalles and Amazon in Morrow and Umatilla counties are exempt from it. Cooperatives are able to establish their own guidelines for dividing up electricity expenses.
Despite not having a stance on LC 1547, Portland General Electric and PacifiCorp have stated that they are in favor of rules that would shift the cost of providing large energy users to the businesses who use that power.
“The scale, pace, and uncertainty surrounding this potential load growth will require additional regulatory updates to protect all customers while creating a path for large customers to expand their businesses,” PacifiCorp said in a written statement. “The current regulatory framework is established to protect customers and align the costs of energy infrastructure with the customers benefiting from these investments.”
Amazon and Meta, the parent company of Facebook, have fought with utilities about how to divide up the costs of maintaining data centers in rate cases before state regulators.
Although the legislation itself may prove controversial, the new legislation might help clear up any ambiguity in the current law and make it easier for the utilities commission to arbitrate such conflicts.
Amazon has stated that it has been discussing the proposed changes to Oregon’s laws governing massive data centers with lawmakers and others for several months, but it has not publicly stated its view on the measure. According to the corporation, some expenses ought to be shared by all utility users.
The continuous grid renovations and modernization needed to meet the demands of all energy users are financed by transmission fees. According to a written statement from Amazon, utility regulators set these transmission fees to ensure that consumers pay their fair amount.
Nonetheless, the business stated that it is appropriate for certain users to pay for their own expenses.
“We make sure that we’re covering those costs and that they’re not being passed on to other ratepayers when we need specific infrastructure to meet our needs (like new substations),” Amazon stated.
A request for comment regarding LC 1547 was not answered by Facebook’s parent company, Meta.
In Oregon, big tech firms wield significant political influence.
A proposal to bind data centers to the same clean energy rules as other industries was rejected by state lawmakers two years ago, despite strong lobbying by technology associations and Amazon. Additionally, lawmakers approved extending the data center tax exemption program till 2032.
According to Jenks of the Citizens Utility Board, the energy use of data centers has sparked a lot of attention and worry. He stated that he will be keeping an eye on how politicians react.
According to Jenks, it will be a test of the data center coalition’s influence against lawmakers’ worries about growing prices.
–Mike Rogoway writes on the business and technology in Oregon. His email address is [email protected].
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