Dive Brief:
- The Federal Energy Regulatory Commission on Tuesday approved five transmission security agreements, or TSAs, between Commonwealth Edison and data center developers.
- The TSAs include a range of provisions that aim to ensure that ComEd’s existing customers are insulated from costs caused by the data centers, according to the Exelon utility. They include a defined ramp, a customer facility readiness obligation, credit obligations, committed revenue contributions, shortfall payments if the data centers’ usage and resulting transmission revenues miss commitments and a termination-fee schedule, among other measures, FERC said in its decisions.
- The agreements are with Equinix, Grundy County Power, Karis Critical, PowerHouse Hillwood Holding and QTS Investment Properties Chicago. FERC last month approved similar agreements between Chicago-based ComEd and Aligned Data Centers, Monarch Rock Air and Red Energy Partners.
Dive Insight:
FERC’s decision comes as state and federal regulators, utilities and others aim to address concerns that existing utility customers may pay for the infrastructure and power supplies needed to serve data centers. Those costs can include grid network upgrades that flow through to transmission rates.
In a Feb. 12 earnings conference call, Exelon officials said the company’s utilities had an 18-GW “high probability” data center pipeline, up from 16 GW a year ago.
In its latest decisions, FERC said the agreements qualify for the Mobile-Sierra presumption. Under that doctrine, FERC must presume that freely negotiated contracts between independent parties are just and reasonable unless the agency finds the rates seriously harm the public.
In a concurrence, FERC Chairman Laura Swett and Commissioner David LaCerte said the Mobile-Sierra presumption is not “a straw man” used by the agency to sidestep its duty of making sure that consumers pay just and reasonable rates.
“If the circumstances demonstrate serious harm to the public interest, and especially harm to third parties such as ultimate ratepayers, the Commission has a statutory responsibility to take action,” Swett and LaCerte said. “Nothing precludes such future examination and action should evidence sufficient to overcome the presumption occur in the future.”
Also, FERC allows transmission providers to charge either the rolled-in embedded costs or incremental expansion costs, without consideration of which one would lead to higher rates.
“Today’s order conforms to this line of precedent by acknowledging ComEd’s intention to seek rolled-in rate treatment to recover the costs of serving these new customers,” Swett and LeCerte said. “The Commission will always reject a rate that seriously harms the consuming public.”
In a separate concurrence, FERC Commissioner Judy Chang continued to warn that once FERC determined the ComEd contracts qualified for the Mobile-Sierra presumption, the agency didn’t scrutinize the agreements further to ensure ratepayers wouldn’t be harmed by the arrangements.
“Reliance on bilaterally-negotiated agreements, particularly ones shielded from meaningful Commission review by the Mobile-Sierra presumption, may not be sufficient to ensure that customers are protected against unjust cost shifts from new large loads,” Chang said.
To provide adequate consumer protections from cost shifts due to data centers, state utility regulators may want to consider requiring additional revenue contributions from end-use loads, according to Chang. “For the Commission, we should assess how to develop customer protection frameworks that can complement and supplement ongoing efforts at the state level,” she said.
