Data center proliferation underlies reliability and cost concerns, OPC tells federal regulators
BALTIMORE – Data centers are the driving force behind unprecedented increases in power demand forecasts in the region, driving up current and future costs for electricity capacity and transmission, and raising concerns about electric-system reliability, the Office of People’s Counsel told the Federal Energy Regulatory Commission (FERC) in comments filed this week.
Data center development requires fundamental changes to how electricity forecasts are developed, costs are shared among customers in the region, and the information that is available to the public, OPC’s comments emphasized.
“The massive power demands of data centers cannot be treated with business-as-usual policies,” Maryland People’s Counsel David S. Lapp said. “In future months and years, Maryland customers will see their utility bills rise significantly if regulators don’t fix current policies so that existing utility customers aren’t forced to pay for infrastructure that would not be built except for the business strategies of some of the wealthiest corporations in the world.”
Data center load growth requires new approaches to addressing electric-system reliability, OPC’s comments said, emphasizing that the most appropriate solution is for data centers to be responsible for sourcing and paying for their own generation. The comments cited the example of Northern Virginia, which anticipates electricity demand to grow by 11,200 megawatts in the next five years—an amount almost twice the demand of Maryland’s largest utility, which developed over the course of a century, and almost as much as Maryland’s total electricity demand of approximately 11,900 megawatts.
OPC’s comments, filed as part of FERC’s technical conference on resource adequacy, pointed out that data center growth drove a major portion of the increase in the regional capacity market price last summer. That price increase will not hit the bills of most Maryland customers until after the summer. Forecasts of continued data center electric-demand growth are nonetheless expected to drive even higher prices for upcoming auctions—including one later this month—for future delivery years.
The forecasts of electric-demand growth are to a significant degree speculative, however, with existing customers taking on major risks of paying for energy infrastructure that may never be necessary, OPC said. Data centers are incentivized to pursue multiple locations to connect to the system, potentially resulting in duplicative counting of the same data center projects. Consistent with its request last year to PJM, the regional system operator, OPC told FERC that policies are needed to ensure better forecasting to reduce speculation.
OPC pointed out that resource adequacy—whether the electric system can reliably provide electricity when demand is at its highest—depends on a combination of generation and transmission. But even excluding transmission, OPC presented data showing that Maryland's current resource adequacy has not worsened despite past power plant retirements. The data shows that the capacity from new generation and pending generation (generation that has agreements to connect to the regional system), combined with decreases in electric demand, more than offset the reductions in capacity due to Maryland power plant retirements occurring from 2015 to 2024.
Data centers should not be interconnected to the transmission system if they jeopardize reliability for existing customers by causing outages, especially for areas with vulnerable and large populations, OPC told FERC, asking it to consider policies to ensure system reliability is maintained for existing customers before the massive demands of data centers put that reliability in question.
OPC’s comments also covered several technical issues and the lack of information available to states to evaluate their energy resources.
The Maryland Office of People’s Counsel is an independent state agency that represents Maryland’s residential consumers of electric, natural gas, telecommunications, private water and certain transportation matters before the Public Service Commission, federal regulatory agencies and the courts.
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