Some consumers pay to power data centers that don’t exist yet as states ask if forecasts are real

But the challenges — some say the impossibility — of building new power plants to meet that demand so quickly have set off alarm bells for lawmakers, policymakers and regulators who wonder whether these utility forecasts can be trusted.

One pressing question is whether the projections are based on data center projects that may never be built — raising concern that ordinary taxpayers may have to foot the bill for building unnecessary power plants and grid infrastructure costing billions of dollars.

This scrutiny comes as analysts warn of the risk of an artificial intelligence investment bubble that has inflated technology stock prices and could burst.

On the other hand, consumer advocates are finding that taxpayers in some areas – such as the Mid-Atlantic power grid, which includes all or parts of 13 states stretching from New Jersey to Illinois, as well as Washington, D.C. – are already covering the costs of providing power to data centers, some of which are built, some of which are not.

“There is speculation,” said Joe Boring, who heads Monitoring Analytics, an independent market watchdog in the Mid-Atlantic grid region. “No one really knows. No one has looked carefully enough at the forecast to know what is speculative, what is double-counting, what is real, and what is not real.”

Doubts about high demand

There is no uniform practice across networks or for utilities to vet such massive projects, and finding a solution has become a hot topic, utility and network operators say.

Uncertainty about forecasts is usually due to two things.

The first concerns developers who are seeking to connect to the grid, but whose plans are not set in stone or lack the heft — customers, funding or otherwise — to get the project done, industry and regulatory officials say.

Another reason is that data center developers are submitting grid connection requests in various separate utility areas, as lawmakers in Texas discovered PJM Interconnection, which runs the Mid-Atlantic grid.

Often, for competitive reasons, developers don’t tell utilities if they have placed other applications for electricity or where, PJM said. This means that a single project can inflate the energy projections of multiple facilities.

Efforts to improve the forecast got a big boost in September, when a member of the Federal Energy Regulatory Commission asked the nation’s grid operators for information on how to determine that a project is not only viable but will use the electricity he says it needs.

“Better data, better decision-making, better and faster decisions mean we can do all these projects, build all this infrastructure,” Commissioner David Rosner said in an interview.

The Edison Electric Institute, a trade association for for-profit electric utilities, said it welcomed efforts to improve demand forecasting.

Real, speculative or “somewhere in between”

The Data Center Alliance, which represents technology giants such as Google and Meta and data center developers, urged regulators to request more information from facilities about their expectations and develop a set of best practices for determining the commercial viability of a data center project.

Improving the accuracy and transparency of forecasts is “an essential first step to achieving this moment” of energy growth, said Alliance Energy Vice President Aaron Tenjom.

“Everywhere we go, the question is: Is (energy) growth real? How can we be so sure?” Tingum said. “And we really view commercial readiness verification as one of those important opportunities that we should embrace at this moment.”

Yigal Feibush, CEO of Pennsylvania Data Center Partners, a data center developer, said the utilities are in a “fire drill” as they try to vet a raft of data center projects that are all seeking electricity.

The vast majority will fail because many of the project’s backers are new to the concept and don’t know what it takes to build a data center, he said.

States are also trying to do more to figure out what’s in utility projections and weed out speculative or duplicative projects.

In Texas, which has attracted large data center projects, lawmakers still haunted by power outages during a deadly 2021 winter storm were shocked when the grid operator, the Electric Reliability Council of Texas, told them in 2024 that peak demand could nearly double by 2030.

They found that state utility regulators lacked the tools to determine whether this was realistic.

The grid operator, utility regulators and utilities weren’t sure whether the energy requests were “real, just speculation, or somewhere in between,” Texas state Sen. Phil King said at a hearing earlier this year.

Lawmakers passed legislation sponsored by King, now law, that requires data center developers to disclose whether they have applications for electricity elsewhere in Texas and sets standards for developers to show they have a significant financial commitment to a location.

Electricity bills are also rising

PPL Electric Utilities, which provides power to 1.5 million customers across central and eastern Pennsylvania, expects data centers to triple peak electricity demand by 2030.

Vincent Sorgi, president and CEO of PPL Corp., told analysts on an earnings call this month that data center projects are “real, and they are coming fast and furious” and that “the risk of overgeneration in the near term simply does not exist.”

PPL said the data center projects included in the forecast are backed by contracts with financial commitments that often reach tens of millions of dollars.

However, the PPL forecast helped motivate one state lawmaker, Rep. Danilo Burgos, to introduce a bill to strengthen the power of state utility regulators to examine how utilities compile their energy demand forecasts.

Taxpayers in the Burgos-Philadelphia area have just absorbed an increase in their electricity bills — which the utility, PECO, attributes to the high cost of wholesale electricity in the Mid-Atlantic grid driven primarily by data center demand.

That’s why taxpayers need more protection to ensure they benefit from the higher cost, Burgos said.

“Once they make their money, whatever company it is, you don’t see any compassion for taxpayers,” Burgos said.