“Ideas have consequences. Even new pathbreaking ones that are shaking the foundations of the Federal Power Act of 1938 and state public utility regulation.”
The Department of Energy has asked the Federal Energy Regulatory Commission to federalize and streamline the connection of large data centers to the interstate transmission grid. DOE last week (Oct. 23) sent FERC a 16-page draft notice of proposed rule making, asking the commission to enact the new, unprecedented rule by the end of April, which is unlikely.
Under the DOE proposal, FERC would take over interconnection decisions for “large load” data centers, defined as those with a load of 20 MW or greater. These decisions are now made by regional transmission organizations, such as the PJM Interconnection, or by state regulatory agencies.
The DOE proposed rule states:
In light of the unprecedented current and expected growth of large loads seeking to interconnect to the transmission system, and to provide open access and non discriminatory access to the transmission system, it has become necessary to standardize interconnection procedures and agreements for such loads, including those seeking to share a point of interconnection with new or existing generation facilities (hybrid facilities).
In a cover letter, Energy Secretary Chris Wright linked his plan for FERC to make the interconnections to the Trump administration’s ambitions for artificial intelligence. Wright wrote, “This Administration is committed to revitalizing domestic manufacturing/ and driving American AI innovation, both of which will require unprecedented and extraordinary quantities of electricity and substantial investment in the Nation’s interstate transmission system.”
Reactions
DOE’s action quickly generated some head-scratching and skepticism as well as qualified and sometimes lukewarm support. Mark Christie, former FERC member and chairman until last summer — when the White House nominated former FERC staffer Laura Swett to the commission with the intent to name her chairman (which occurred on Oct. 23, the same day as the Wright plan) — posted an analysis of the DOE data center proposal on Linkedin.
Christie, who now heads the new Center for Energy Law and Policy at the William and Mary Law School, commenting that “the evil is always in the details,” raised three “core questions” about the Wright proposal:
Christie’s final advice on the proposed rule: “Stay tuned.”
On Twitter, Travis Kavulla, independent power producer NRG’s regulatory guru and former Montana utility regulator, commented, “Utilities will oppose this & they’ll seek to make it a dead letter by saying there is always *some* part of interconnection that is ‘distribution’ (not ‘transmission’), thus retaining a parochial claim to their gatekeeper status. If DOE/FERC are serious, pay attention thereto!”
Kavulla also parenthetically said of Wright’s proposal: “(And fwiw, that is probably not the worst idea!)” The call for a final rule by April 30 is “light speed as far as that agency’s regulatory process,” he said.
In response to an email request for comment from The Quad Report, Drew Maloney, president and CEO of the Edison Electric Institute, offered an anodyne comment, “We share the Administration’s commitment to American energy dominance and appreciate their leadership to accelerate energy to win the AI race and fuel our economy. We look forward to working with FERC to strengthen the grid, drive down costs for customers, and improve reliability across our country.” EEI is the Washington lobbying group for the nation’s investor-owned utilities.
The DOE proposal also comes as the commission has been grappling for months over data center-related issues, particularly the contentious issue of co-locating data centers with existing generation and the implications of the practice on the grid.
DOE’s Thinking–and ACRE
In a Twitter post, Chris Wright made clear that the administration supports co-location. He said, “The proposed rule allows load and generation to be built together, instead of waiting years for sequential approvals for critical infrastructure. By co-locating energy generation with large loads, this order could slash interconnection timelines and fast-track the next wave of AI and energy growth, boosting American competitiveness.”
An alternative way to prevent the apparent collision of data center power demand and an already stressed interstate grid is to keep new data center power supplies off the grid. Houston-based Advocates for Consumer Regulated Electricity (ACRE, lead by Travis Fisher and Glen Lyons) has been pushing the idea of data centers contracting directly for power supply, not connected to the grid.
That concept has been getting some momentum. In August, New Hampshire Gov. Kelly Ayote signed legislation to exempt from complex state utility regulation off-grid power supplies for data centers in the state. A Wall Street Journal op-ed by Fisher and Lyons commented:
New suppliers can start projects unencumbered by decades of heavily regulated business practices. Off-grid suppliers can consider innovation in all aspects of the business, beyond the usual choice of generation types.
Ideas have consequences. Even new pathbreaking ones that are shaking the foundations of the Federal Power Act of 1938 and state public utility regulation.
————————–
This is an edited and slightly expanded version of this post published by Kennedy Maize at Quad Report. A Washington, D.C.-based journalist, Maize has covered energy and environmental topics for more than 40 years.
I understand large loads and their impacts are big deal for ISOs. Why does the federal government necessary to jump in on this issue? They want it to turn out a certain way… which is???