Proposed transmission service agreements, or TSAs, between Commonwealth Edison and data center developers fail to adequately insulate ratepayers from the potential costs of serving those planned facilities, the Illinois attorney general’s office said in recent filings at the Federal Energy Regulatory Commission.
The agreements are based on payment models in which the offtaker promises to pay a minimum and post security if its usage does not match its revenue commitment, according to ComEd.
However, there is no guarantee this revenue will cover the cost incurred to provide the required transmission facilities, the state argued.
“[T]he safeguards in the TSA do not prevent existing customers from paying the costs caused by this large, discrete load that will impose significant costs on the transmission system and on all customers,” the AG’s office said in nearly-identical protests against two separate agreements. “The provision requiring ComEd to recover transmission facilities costs in its formula rates implicates the rates paid by other customers and may result in substantial transmission price increases and subsidization by existing customers.”
Before approving any TSAs, FERC should determine how they may affect existing customers through increased costs and rates, reliability challenges and subsidization, according to the AG’s office.
“The Commission should not approve the proposed TSA without addressing these issues, in coordination with state commissions and other state and consumer representatives, to avoid spiraling rate increases and possible service curtailments or black-outs,” the office said.
The TSAs targeted in the protests are between ComEd, an Exelon utility, and Monarch Rock Air and Karis Critical, which are planning data centers in northern Illinois that could grow to roughly 1,200 MW and 500 MW, respectively.
Since Dec. 19, ComEd has also filed TSAs for FERC’s approval with data center developers Aligned Data Centers, Equinix, Grundy County Power NR I, PowerHouse Hillwood Holding, QTS Investment Properties Chicago and Red Energy Partners.
In a Nov. 4 earnings call, Exelon officials said the company’s advanced data center pipeline had grown to 18 GW, up 13% from the previous quarter, and that potential future large load additions totaled 47 GW.
The ComEd TSAs contain a “comprehensive package” of safeguards to protect customers from the effect of large load service requests, the utility said in its filings at FERC. They also are designed to protect customers if the data centers don’t come online as scheduled or meet their target growth rates, ComEd said.
“The TSA’s terms and conditions include a defined ramp, a customer facility readiness obligation, credit obligations, committed revenue contributions, shortfall payments if the Data Center’s usage and resulting transmission revenues miss commitments, and a published termination‑fee schedule,” ComEd said in the PowerHouse Hillwood filing Tuesday. “These protections reflect Hillwood’s commitment to the project and guard against shifting costs and risks to other customers, as well as to minimize the risk that the presence of oversized or unrealistic applications unreasonably harm other applicants.”
State and federal regulators struggle with data centers and affordability
The proposals by Chicago-based ComEd and the protests by the AG’s office come amid concerns about how data center development may drive up electric rates for other utility customers amid a broad focus on electricity affordability.
“I never want Americans to pay higher Electricity bills because of Data Centers,” President Donald Trump wrote Monday on social media. Data center companies must “pay their own way,” he said.
The Trump administration is working with data center companies to ensure they pay for their own power needs, and Microsoft will make “major changes” this week, according to Trump.
In an initiative announced Tuesday, Microsoft said it would “ask utilities and public commissions to set our rates high enough to cover the electricity costs for our datacenters.”
The ComEd TSAs are similar to one between PECO Energy, an Exelon utility, and Amazon Data Services related to a planned data center in Pennsylvania that FERC approved in November, according to ComEd.
In a concurring statement to that order, FERC Commissioner Judy Chang said the agency will likely be asked to review such one-off agreements more often, but that the agency lacks a framework for assessing customer protections against transmission cost shifts in those agreements.
Meanwhile, more than half of states have approved or are considering large load tariffs — including in Illinois, where the measure is pending.
The Illinois Commerce Commission is also reviewing the ComEd agreements, according to the utility.
The data centers will be served exclusively under ComEd’s state jurisdictional retail tariff and won’t take transmission service under the PJM Interconnection’s tariff, the utility said. ComEd said it filed the TSAs for FERC’s approval because their “provisions may be construed as affecting rates and practices for FERC jurisdictional transmission service.”
FERC should defer ruling on the TSAs until after the ICC makes a decision on ComEd’s proposed rules for interconnecting large loads, the AG’s office said. The ICC has a May 14 deadline to issue an order in the case.
Pointing to Chang’s comments in the PECO decision, the AG’s office said FERC should require ComEd and the data center companies to address whether they will fully pay for the costs caused by their projects and whether the “higher of” policy — which aims to ensure interconnection customers don’t increase costs for existing customers — or another policy, such as a Contribution in Aid of Construction model, should be included in ComEd’s agreements to recover transmission facility costs.
Separately, Michigan Attorney General Dana Nessel on Friday asked the Michigan Public Service Commission to reconsider its mid-December decision to conditionally approve contracts for DTE Electric to serve a 1.4-GW data center planned by OpenAI, Oracle and Related Digital.
Nessel said she wants a contested case hearing to review the “heavily redacted” special contracts for the data center, verify DTE’s claims ratepayers will see affordability benefits from the project and ensure that the data center won’t increase electric rates for existing customers.
