Dive Brief:
- Oregon regulators on May 7 approved a new large-load tariff framework for data centers exceeding 20 MW that requires long-term contracts, customer-paid distribution upgrades and a surcharge for the largest projects.
- The Oregon Public Utility Commission order is the first major implementation of Oregon’s 2025 POWER Act in Portland General Electric territory and links large-load interconnection approvals to emissions and clean energy requirements.
- Analysts said the framework, Schedule 96, provides regulatory certainty for utility investment while limiting cost shifts to other customers, potentially creating a model for other utilities facing rapid data center growth.
Dive Insight:
Oregon is among the latest states to adopt a large-load tariff aimed at protecting existing ratepayers from the costs of interconnecting large-load customers, primarily artificial intelligence data centers.
The framework, which takes effect June 10, uses a combination of longer-duration contracts, customer surcharges and emissions-linked interconnection rules that could make Oregon’s approach a closely watched model for utilities and regulators confronting data center-driven electricity demand.
The order establishes a dedicated rate class for large loads and requires customers to cover 100% of distribution network upgrades needed to serve their projects. Minimum generation and transmission demand charges are set at 90% of contracted system capacity, even if less is used by the customer.
Contract terms escalate with project size, beginning at 10 years and extending to 30 years for loads of 220 MW or more. Customers seeking early contract termination could face penalties tied to remaining demand obligations and the unspent value of new distribution investments.
Projects larger than 100 MW will also pay a surcharge of 1 cent/kWh. Revenue from the surcharge is intended to fund programs that offset residential customer costs and address low-income energy burden, according to the commission's final ruling.
The commission also approved PGE’s proposed peak growth modifier, with some modifications, making growth-related infrastructure cost allocations indefinite, rather than capping them at 10 years. Additionally, regulators rejected the utility’s proposal to establish rate credits for customer classes with declining load. The mechanism assigns more shared infrastructure costs to customer classes driving the fastest electricity demand growth.
The order further ties large-load interconnection approvals to clean energy availability and state emissions targets. Schedule 96 customers must demonstrate that their load growth plans can scale without undermining utility emissions obligations, making the decision both a rate design and climate policy measure.
“As energy demand grows, it is critical that the costs of new infrastructure are allocated fairly and transparently,” said John McFarland, chief customer officer at PGE, in a company press release.
PGE’s shares rose only modestly after the PUC approved the tariff. The move came after PGE had already been touting load growth, rate-base expansion and 2026 earnings per share guidance of $3.33 to $3.53 in its first-quarter earnings release and investor presentation. The order therefore reinforced an existing bull case among analysts and investors rather than creating a new one.
Analysts at Capstone LLC, a policy analysis and investment research firm, said the order provides regulatory certainty for PGE’s future data center-related investments while establishing cost allocation measures intended to reduce cross-subsidization concerns and political pressure around load growth.
The firm said it expects the framework to increase service costs and interconnection risks for hyperscale customers.
The order applies only to PGE. A separate proceeding involving PacifiCorp and its Pacific Power operations remains unresolved and has faced challenges from consumer advocates.
PGE must submit revised tariffs by June 3. The new schedules take effect June 10, while requests for rehearing are due July 6, leaving open the possibility of additional regulatory action.
