Massive Pennsylvania data center spurs call to protect consumers from getting hit with power grid costs
Published in Business News
An independent monitor has asked federal officials to ensure consumers don’t get stuck with the bill if the electric grid can’t handle power needs of a massive data center planned for Bucks County, Pennsylvania.
The monitor, Joseph Bowring, filed comments with the Federal Energy Regulatory Commission (FERC) last week, asking that a Sept. 23 transmission service agreement between Peco and Amazon Data Services be rejected.
The agreement is regarding the 2 million-square-foot “digital infrastructure campus” Amazon plans for the Keystone Trade Center, an 1,800-acre property once owned by U.S. Steel, according to Falls Township. The data center, meant to handle computing needs of the wildly increasing demand for AI, has been heralded by Pennsylvania Gov. Josh Shapiro and the Trump administration.
But Bowring, the independent market monitor for the region’s grid operator PJM, questioned the agreement, which is designed to protect power customers from economic risks associated with the cost of upgrading systems to handle the new load.
In the agreement, Peco sought to ensure, among other things, that consumers don’t get stuck with the bill for grid upgrades if Amazon never builds the data center.
However, Bowring said that the agreement does not “address the key question of whether there is sufficient capacity to serve the identified large new data center load without imposing significant and unacceptable reliability- and capacity-related cost impacts on all PJM customers.”
He’s not alone in concerns about the cost data centers could impose on homeowners and other power customers. Many have already seen utility bills rise rapidly in the past few months.
PJM, Peco, and the grid
PJM manages the electric grid for all or parts of 13 states and the District of Columbia. PJM is responsible for maintaining grid reliability, coordinating electric flow, and assessing capacity. It is the largest regional transmission organization in the U.S.
The data center lies in Peco’s service territory within the PJM grid.
The capacity and reliability of electrical grids across the United States has emerged as a major issue as data centers rush to go online.
David Mills, chair of the PJM Board of Managers, wrote in an August letter to stakeholders that PJM is forecasting peak load to growth of 32 gigawatts by 2030. Of that, 30 gigawatts is projected to come from data centers.
Grid operators and power companies like Peco are scrambling to evaluate whether they can provide continuous electricity with the massive new loads without expensive upgrades such as new transmission lines and substations — costs that advocates fear will be passed onto consumers.
Protecting consumers
Making sure power consumers don’t get stuck with the cost of upgrades has been a key point of consumer advocates.
Bowring wrote that while the agreement does include some important provisions to protect energy customers from risk, it does not go far enough.
“The Market Monitor recommends that the agreement not be approved unless Peco can demonstrate that the referenced new data center load can be served reliably and economically,” Bowring wrote to FERC.
The Falls Township data center is one of two big projects Amazon has planned in Pennsylvania, Shapiro announced in June.
The company plans to invest at least $20 billion in the construction of data center complexes in Pennsylvania, in what officials called the largest private-sector investment in the state’s history. The second complex would be built alongside a nuclear power plant in Luzerne County.
Both would require enormous amounts of power.
For example, FERC has already rejected one Amazon “behind-the-meter” power connection of 480 megawatts for the Luzerne County data center. That’s more power than is consumed by some small cities.
Bowring addressed the data centers during a summit on PJM at the National Constitution Center in September that was attended by multiple governors, including Shapiro.
“PJM has a problem: Capacity,” Bowring said at the summit. “There’s no extra capacity, and there’s lots of data centers that want to join … It cannot be handled by the market as it exists.”
PJM has said it does not have the authority to deny the interconnection of new data center loads even if it does not have the capacity. Bowring disagrees but is asking FERC to clarify the matter.
Peco’s ‘extensive planning’
Greg Smore, a Peco spokesperson, said the utility is working with Amazon.
“We have done extensive planning to ensure we can deliver the energy needed to power this data center through our transmission and distribution system,” Smore said. “That data center, like any other large customer, is responsible for procuring electric supply, through an energy supplier or the existing PJM energy market.”
Smore said that knowing there’s “an adequate supply of energy to serve all our customers at a reasonable price is a real concern.”
So Peco, which is owned by Exelon, is working with stakeholders, he said, to add more generation to the grid while ensuring reliability and help address rising energy supply costs.
He said the agreement with Amazon, “protects all customers in southeastern Pennsylvania from bearing greater transmission service costs if the data center does not make the sizable contribution to our system costs that would be expected.”
Advocates fear costs to public
The nonprofit National Resources Defense Council (NRDC), an environmental advocacy group, estimates Peco could pay $9.1 billion in costs by 2033 related to the need for greater capacity.
“The projected demand from data centers is vastly outstripping the amount of new supply in PJM,” said Claire Lang-Ree, an advocate with NRDC.
“It will cause power bills to rise and stay high for the coming decade, mainly through capacity cost increases,” Lang-Ree said.
The NRDC estimates cumulative costs could result in a $70 monthly rise in average electric bills in coming years across the PJM grid.
In addition, she said it would lead to a decline in reliability and an increased risk of blackouts for the general public. And, she said, the power demand could undermine states’ clean energy and air quality goals.
“It’s really hard to overstate what’s at stake here,” Lang-Ree said.
Clara Summers of Consumers for a Better Grid, a nonprofit watchdog, said states should impose tariffs to be paid by data centers to support the large power loads they require and ensure that costs of new utility infrastructure doesn’t fall unfairly on consumers. And data centers provide their own electric supply.
Summers likened not taking action to allowing the wealthiest acquaintances at a restaurant gathering to order the most expensive food, then, “dining and dashing.”
“Unless something is done, everyday people will be left holding the check for some of the wealthiest companies in the world, and that’s unacceptable,” Summers said.
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