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Federal regulators on Thursday took steps aimed at both speeding up the buildout of AI data centers and reducing costs.
The Federal Energy Regulatory Commission (FERC) directed regional electric grid operators to reform various processes related to the connection of these and other large sources of power demand to the grid.
“We are charting new territory and setting the standard for how America will responsibly and efficiently integrate large energy loads into the bulk electric grid while protecting consumers,” FERC Chair Laura Swett said Thursday.
“My takeaways from the hyperscalers were, the biggest ones were that the rules aren’t clear and the markets aren’t going fast enough. And we are answering both of those today in very loud order,” added Swett, one of three Republicans on the commission.
Swett said the new orders approved Thursday require regional grid operators to show that they have adequate safeguards to prevent costs from shifting to power consumers — or to take steps to create them.
The Republican commissioner also said that FERC is preliminarily directing operators to “provide unprecedented transparency” to allow states to use information to set electricity rates.
And, she said the orders will require the markets to create clear rules for consumers who bring their own power along with them.
However, Swett also acknowledged the commission’s authority to protect ratepayers is limited and called on states to take further action.
“We make clear that we act today to guard against cost shifting among transmission customers, but the states have the responsibility to ensure that there is no cost shifting among retail customers, because that simply is not within FERC’s power to safeguard,” she said.
“We call on our state counterparts to finish the job,” Swett said.
The AI industry has pushed to rapidly build new data centers to support the development of the technology, which requires vast computing power. Data centers therefore use a lot of electricity and are, in many cases, increasing electricity demand. This creates both cost and grid reliability concerns.
Americans have become increasingly wary of data centers and how the sprawling server warehouses will impact their electricity prices. Power costs continue to rise — they were up 5.9 percent year-over-year in May.
A recent Reuters/Ipsos poll found that 77 percent of Americans are concerned that AI will make electricity more expensive and 57 percent said they would not support a data center being built in their community.
Major tech companies attempted to quell these concerns, signing on to a White House pledge earlier this year to cover the full costs of bringing new data centers online and prevent ratepayers from facing price hikes.
FERC is the nation’s federal energy regulatory body and has jurisdiction over interstate power transmission. It is made up of five commissioners, currently three Republicans and two Democrats.
The U.S. electric grid is divided into regional grid operators. States also have some authorities through public utility commissions or similar organizations.
Grid operators are usually relatively unknown to the general public, but one such operator called PJM has recently come under political fire from bipartisan governors and the Trump administration over electricity rates.
In the face of rising demand from large facilities like data centers, Sen. Cynthia Lummis (R-Wyo.) proposed legislation Wednesday to clarify that FERC has jurisdiction over how massive electricity users connect to the grid. It also directs the agency to create a standardized process for such interconnections.
Rob Gramlich, president of consulting firm Grid Strategies, said that under Thursday’s orders, regional transmission operators will have to make some notable changes.
“They require a number of changes for the grid operators, some of which are providing information to states so that states can allocate costs to large-load customers and some of them are providing new services to enable faster interconnection for the new large load customers,” Gramlich said.
“I do think these will help. There’s a lot riding on what the states do since the states regulate retail customers including these large loads but I do think FERC is doing what it can within its power over the wholesale system,” he added.
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