Dustyn Thompson is the director of the Delaware chapter of the Sierra Club.
In response to the Opinion by Marc Brown (“Don’t undermine Delaware’s economic future”): Delaware is indeed at a crossroad. We can pursue unchecked data center development and pass the costs on to residential and commercial ratepayers, or we can ensure that each project is carefully planned and coordinated, so it’s clear exactly what it will cost to develop and come online in Delaware.
PJM, our regional grid operator, emphasized during a Feb. 27 joint committee hearing of the Senate and House of Representatives that states must develop policies to ensure adequate energy and infrastructure for new large loads. PJM’s primary focus must be to facilitate the bringing of new power online and its reliable transmission across the region. It plans to accelerate the deployment of power plants dedicated solely to data centers and to require data centers that do not supply their own power to be disconnected before residential customers and service providers, like hospitals, are. All other data center regulations are up to the states to develop.
According to PJM’s independent market monitor, families and businesses are already paying $23.1 billion more on their energy bills due to increased costs distributed across the region from data centers. This problem could worsen locally if we neglect proper planning and fail to review each project thoroughly to ensure that developers cover the full costs of necessary upgrades for reliable service. Ratepayers in Virginia are already paying an extra $16 a month for infrastructure related to data centers, with an additional $13 planned next year. That’s why all three utilities in Delaware support Senate Bill 205.
It’s crucial to understand what this legislation actually does, to understand how it will help our business community, not harm it.
Right now, in Delaware, there is no single agency that reviews data center applications from the perspectives of energy infrastructure and ratepayer costs. In fact, as we heard in an answer to a question by Sen. Eric Buckson, R-Camden, at the joint hearing, we have no real regulatory framework for data center development. Senate Bill 205 rectifies this problem by charging the Public Service Commission with reviewing each proposed Delaware data center project to ensure that we have adequate infrastructure and energy to support it. If there is not enough energy or the transmission system cannot handle the load, the PSC can assign costs to each individual project developer to ensure that the energy and infrastructure are paid for before we grant approval.
From a business perspective, it is important to have these project-level reviews to ensure that new businesses that invest in Delaware after a major data center project are not stuck paying for upgrades that would not have been needed if the data center had paid its share. This is what is called a “first mover advantage,” which allows large developers to crowd out smaller businesses in an area by saddling them with downstream costs.
In the end, it’s pretty straightforward. This bill makes sure that each data center pays for its own power and infrastructure, instead of Delaware families and other businesses paying for them.
There are those pushing misinformation that this bill would affect existing manufacturing customers, large retailers and other non-data center businesses, but that is not the case. Senate Bill 205, as amended by Senate Amendment 1, only applies to businesses that connect directly to the transmission system. Any business that connects to the distribution system, which every residential customer and business except for one in the entire state of Delaware does, will not be impacted. Additionally, projects requiring review would have to use at least 100 megawatts of power, enough to power 100,000 Delaware homes. The only entity even close to that number is the Delaware City Refinery, which uses a little over 80 MW, allowing even it a large buffer for expanded operations.
Currently, the types of protections that exist in states like Virginia, Maryland, New Jersey and Pennsylvania do not exist here in Delaware. For example, we do not have a large load rate class to ensure that there are sufficient financial commitments, such as lines of credit to draw from for infrastructure costs — requirements that data centers are paying for the power that utilities contract to purchase on their behalf — or early exit fees for data centers that require large investments but then leave the state before those investments are paid off.
Senate Bill 205 is one of several pieces of legislation that Delaware must pass to ensure that these protections are in place, so we do not move too quickly at the expense of Delaware families and other businesses.
Reader reactions, pro or con, are welcomed at civiltalk@iniusa.org.
