Federal regulators approved a plan allowing tech companies to directly connect massive data centers to power plants, aiming to address electricity shortages and meet surging demand. The order, which arose from a dispute in Pennsylvania, could set a precedent for future agreements and was supported by power plant owners.
Thursday’s order from federal regulators grew out of a dispute between power plant owners and electric utilities over a proposed colocation deal between Amazon Web Services and the owner of the Susquehanna nuclear power plant in Luzerne County, Pa.
HARRISBURG, Pa. — Federal regulators will allow tech companies to effectively plug massive data centers directly into power plants, issuing a long-awaited order Thursday, as the Trump administration urged the Federal Energy Regulatory Commission to help the U.S. lead the world in The commission’s unanimous order is designed to clear up pressing issues around so-called “colocation” agreements in the nation’s largest grid territory, which stretches across Mid-Atlantic states to parts of Illinois and Indiana.But it could become a blueprint for how FERC handles an October request from Trump’s energy secretary, Chris Wright, to ensure that data centers and large manufacturers get the power they need as quickly as possible.Laura Swett, FERC’s chair, told Thursday’s meeting that clearing the way for massive energy users — like data centers — to get electricity straight from power plants was a “critical step to give investors and consumers more certainty on how FERC believes we can solve the problem of meeting historic surging demand and realize our greatest potential as a country.”Power plant owners applauded the step, as their share prices rose steeply in Thursday’s trading. Advanced Energy United, whose members provide solar and wind power, said the FERC order should help clarify how big power users can set up their own power sources. The Edison Electric Institute, which represents for-profit utilities, said only that it would “continue to work” to support rapid data center connection, protect ratepayers from cost-shifts and strengthen the grid for everyone. Jeff Dennis, executive director of the Electricity Customer Alliance, said the order showed that FERC is trying to address looming issues around fast-growing power demand and underscored the urgency to reform grid policy.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 Luzerne County, Pa. For tech giants, such arrangements represent a quick fix to get power while avoiding a potentially longer and more expensive process of hooking into a fraying electric grid that serves everyone else. But utilities protested that it allows big power users to avoid paying them to maintain the grid. Some consumer advocates maintained thatto data centers could drive up energy prices without an answer for how rising power demand will be met for regular ratepayers.It requires the operator of the Mid-Atlantic grid, PJM Interconnection, to develop rates and conditions for different colocation scenarios involving new power plants or sources. That could mean allowing a big power user to pay for only the transmission services they use, considerably less than they might otherwise pay to connect to the grid through a utility. The order also could require a big power user that colocates with an existing power plant to pay the cost to replace the energy that it diverts away from the broader electric 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