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Federal regulators issued a long-awaited order Thursday that will allow tech companies to effectively plug large data centers directly into power plants. trump The administration has urged the US to lead the world in artificial intelligence and help revive domestic manufacturing.
The Federal Energy Regulatory Commission’s unanimous order is designed to address significant issues surrounding so-called “colocation” agreements in the nation’s largest grid region, which stretches from the Mid-Atlantic states to parts of the Pacific Ocean. Illinois And Indiana,
But it could become a blueprint for how FERC handles Trump’s Energy Secretary Chris Wright’s October request to ensure data centers and big manufacturers get the power they need as quickly as possible.
It also comes amid concerns that the Mid-Atlantic region, covering about 65 million people, will face power shortages in the coming years, as the construction of data centers outpaces the pace of new power sources coming online.
FERC Chairwoman Laura Sweatt said at Thursday’s meeting that clearing the way for large-scale energy users — such as data centers — to receive electricity directly from power plants was “an important step forward in giving investors and consumers greater certainty on how FERC believes we can solve the problem of meeting historic rising demand and realize our greatest potential as a country.”
It would also protect regular ratepayers, he said, even though there is evidence in various states that regular ratepayers are bearing the cost of new power plants and transmission lines to feed energy-hungry data centers.
Power plant owners applauded the move, as their share prices rose sharply in Thursday trading. Advanced Energy United, whose members provide solar and wind power, said FERC’s order will help clarify how large power users can install their own power sources.
The Edison Electric Institute, which represents for-profit utilities, said only that it would “continue to work” to support faster data center connections, protect ratepayers from cost-shifting, and strengthen the grid for all.
Jeff Dennis, executive director of the Electricity Customer Alliance, said the order shows that FERC is trying to address emerging issues around rapidly growing electricity demand and underscores the urgency of reforming grid policy.
Thursday’s order arose from a dispute between power plant owners and electric utilities over a proposed colocation deal between Amazon’s cloud-computing subsidiary and the owner of the Susquehanna nuclear power plant in Pennsylvania.
For tech giants, such arrangements represent a quick solution to getting power quickly, while avoiding the potentially longer and more expensive process of connecting to the patchy electrical grid that serves everyone else.
But utilities protested that it allows large power users to avoid paying to maintain the grid. Some consumer advocates say shifting energy from existing power plants to data centers could drive up energy prices without providing an answer to how rising electricity demand would be met for regular rate payers.
FERC’s Thursday order establishes some new regulatory tracks.
Requires the operator of the Mid-Atlantic grid, PJM Interconnection, to develop rates and terms for various co-location scenarios involving new power plants or sources.
This could mean allowing a large electricity user to pay only for the transmission services they use, which would be significantly less than what they would pay to connect to the grid through a utility.
The order could also require a large electricity user to work with an existing power plant to pay the cost of diverting the energy it takes away from the broader electrical grid.
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Follow Marc Levy on X at https://x.com/timelywriter.