Large load datacenters are driving a large proportion of investment by utilities required for load augmentation. This introduces asymmetry with significant long-term investment to serve one specific group of customer over the current broad retail/commercial customer base.
This one customer group - hyperscalers - are also prone to rapid technological change. This poses the dilemma of how to ensure this group pays for the cost of serving them and shielding existing customers from the risk of future datacenter power demand being lower than expected.
Utilities are adopting several mechanisms to balance attracting new large customers while protecting existing customers (ratepayers) with "large load tariffs":
- Rates based on the marginal cost of serving the new customer
- Long-term contracts obliging payment of service regardless of whether power is required, to provide revenue certainty; an option to exit the contract for a fee could be a feature
- Minimum monthly demand and energy charges - i.e. take-or-pay, so that large customers contribute to grid costs even during low usage periods. Foe example, AEP Indiana uses a charge based on 80% of contracted or historical peak demand
- Collateral requirements
Examples of large load tariff protectionist features include:
| State | Utility | Tariff Features | Purpose / Notes |
|---|---|---|---|
| New Mexico | Multiple Utilities | Special rates allowed by law if they recover incremental service costs | Supports economic development while protecting existing ratepayers |
| Indiana | AEP Indiana | Minimum demand charge (80% of contracted/historical peak) | Ensures cost recovery even during low usage periods |
| Kansas | Evergy | 15-year contracts, collateral requirements, early termination fees | Provides revenue certainty and risk mitigation |
| Georgia | Georgia Power | Load forecast shows high growth; cautious tariff commitments due to project risk | Focus on data centers; many projects not yet committed |
| Texas | Oncor, CenterPoint | Tariffs include peak demand incentives and grid contribution requirements | Designed to manage grid stress and incentivize off-peak usage |
| Virginia | Dominion Energy | Tariffs include clean energy integration options and flexible load management | Aligns with state clean energy goals and large customer flexibility |
| Arizona | APS, SRP | Tariffs include time-of-use rates and infrastructure cost-sharing | Encourages load shifting and shared investment in grid upgrades |
| North Carolina | Duke Energy | Tariffs include customer commitment thresholds and performance guarantees | Ensures reliability and investment justification |
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