DOVER – On Wednesday, the House Natural Resources & Energy Committee advanced legislation aimed at preventing energy costs from large energy-use facilities from being shifted onto residential, small business, and other electric customers.
House Bill 233, sponsored by Representative Frank Burns and Senator Stephanie Hansen, would require Public Service Commission-regulated utilities, such as Delmarva Power, to establish a separate rate for large energy-use facilities.
A large energy use facility is one that uses or is able to use 20 megawatts (MW) or more and is primarily engaged in providing web hosting, streaming, or data processing services. This includes large scale data centers, five of which have expressed interest in operating in Delaware. Together these data centers would require over 2,000 MW of electricity to operate. The entire state currently requires roughly 2,700 MW at peak times.
In total, Delaware electric customers use roughly 11.3 million megawatt hours (MWh) of electricity a year. Just one of the proposed data centers would consume 8.7 million MWh of power in the same time period.
The increased strain on Delaware’s electric grid would create several risks for consumers, including rising energy prices due to scarcity, potential energy shortages, and costly upgrades to our electric grid infrastructure.
In West Virginia, for example, ratepayers are being forced to foot the bill for an infrastructure buildout to support the increased energy demand from the state’s data centers.
“Delaware is a small state, and every decision we make regarding our energy grid can have huge effects on residents,” said Rep. Frank Burns.
“We have heard from our neighbors in other states how much data centers have hurt their communities, and how often the costs trickle down to ratepayers. Delawareans should not bear the burden of massive data centers coming into our small state, and siphoning energy from our already limited supply.”
Delmarva purchases power from PJM Interconnection LLC (PJM). In recent years, they have been raising prices, which has hit consumers hard. Over the summer, PJM announced a major jump in prices at $329.17 a megawatt-day, around 22% higher than last year’s levels. The company cited data center expansion within the network as one of the reasons for this increase.
PJM estimates that data centers will make up more than 90% of the new power demand it will see by 2030. An analysis from ICF International predicts that residential bills may rise 30-60% by that time.
By creating a separate rate for large energy use facilities, HB 233 ensures that large energy-use facilities pay their fair share by creating a comprehensive framework for the Public Service Commission to evaluate those rate applications.
The following factors will be considered in their evaluation:
- Whether the rates have the potential to result in increased rates or unwarranted risk to other retail electricity customers.
- Whether the rates will provide for equitable contributions to grid efficiency, reliability, and resiliency.
- Whether the rates will impede the utility’s ability to meet renewable energy targets and reduce greenhouse gases consistent with state policy.
- Whether the rates will allow for procurement of, or contracts for, generation resources that support the electric utility’s ability to meet renewable energy targets and reduce emissions of greenhouse gases consistent with state policy.
- Meet any other conditions required by the Commission in the public interest.
“As Delaware and states throughout our region consider large-load energy use projects such as data centers, it is critical that we put proper guardrails in place to protect the Delawareans we serve,” said Senator Stephanie Hansen.
“By allowing separate rates to be applied to large energy-use facilities, we prioritize energy reliability for our constituents and ensure these users are paying their fair share for energy and distribution.”
HB 233 takes effect upon enactment, and regulated utilities must file an application to establish rates required under this legislation within 180 days of the effective date.
It now heads to the House floor for a full vote.
