Pacific Power customers in Washington County and across Oregon would no longer subsidize the power infrastructure that data centers demand under a new agreement the utility reached with state regulators.

Pacific Power agreed to the deal in September after months of negotiations with the Oregon Public Utility Commission (PUC), the Citizens' Utility Board and several environmental groups, the Oregon Capital Chronicle first reported Wednesday, Sept. 23.

The agreement would create a separate rate class for new data centers and directly assign them the costs of new power plants, batteries, transmission lines and other upgrades needed to serve them.

That includes infrastructure that also benefits residential and industrial customers.

The Citizens' Utility Board, a ratepayer watchdog, called the deal the strongest from a for-profit electric utility under Oregon's POWER Act in a Tuesday, Sept. 22 news release.

The POWER Act requires the state's monopoly electric utilities to create separate data center rate classes so other customers don't subsidize server farms' massive energy appetite.

The three-member PUC is expected to vote on the agreement Friday, Nov. 13, according to Charlotte Shuff, the Citizens' Utility Board's outreach and communications director. Shuff told the Capital Chronicle she expects the Data Center Coalition, an industry group representing tech companies, will appeal after the vote.

What it means locally

Bob Jenks, executive director of the Citizens' Utility Board, told the Capital Chronicle that new transmission lines in Washington County could benefit all customer classes, since residential customers there are also using more air conditioning in the summer. That shared benefit makes cost assignment more complex in populated areas than in rural ones.

Under the proposal, costs would be split proportionally. If a 100-megawatt transmission line is needed to serve a 50-megawatt data center along with other customers, the data center would pay for 50% of the line. New transmission lines can cost several million dollars per mile.

Pacific Power serves more than 650,000 Oregon customers. Data centers drove an 8% increase in the utility's energy demand between 2013 and 2023, according to a Sightline Institute analysis of federal energy data.

Rates up 50% since 2020

Both Pacific Power and Portland General Electric (PGE) have raised customer rates 50% since 2020. During that same period, most other customer classes became more energy efficient. Data centers, meanwhile, grew to account for nearly one-quarter of all retail electricity sales statewide.

The PUC approved a similar but narrower PGE plan in July. After the PUC signed off, PGE raised data center rates nearly 30% and slightly lowered residential bills. Pacific Power's proposal goes further by assigning costs based on overall demand rather than peak demand, and by requiring data centers to cover all new generation, storage, wires, poles and market energy purchases tied to their load.

Pacific Power's plan applies only to future data centers. The utility currently has just a handful of data center customers, Jenks said, "but dozens want to get onto their system, and some of them are massive."

What's next

The PUC votes Nov. 13. The Data Center Coalition is expected to appeal. The coalition also challenged PGE's plan; the PUC rejected that challenge, but the Citizens' Utility Board expects the coalition will take the PGE case to the Oregon Court of Appeals.

Pacific Power will need to address costs for its existing data center customers next spring.