Data center power consumption is soaring across Oregon, growing much faster than the state’s generation and transmission capacity. Utilities are drawing up plans to boost capacity, but state regulators warn that under existing law, some of the costs could be shared by residential ratepayers.
House Bill 3546 would put data centers and cryptocurrency miners into a new class of Oregon utility customer.
The bill would give energy regulators the authority to ensure homes and small businesses aren’t shouldering data centers’ costs. It would also require new customers with big power loads to sign a 10-year contract to buy a minimum amount of power, to ensure other ratepayers aren’t left holding the bag if the anticipated demand doesn’t materialize.
“Without intervention, the cost created by the disproportionate demand of big energy users will be borne by residential consumers who are already struggling,” said Rep. Pam Marsh, D-Ashland, one of the bill’s four sponsors.
“Data centers have a specific massive impact on the grid that simply is not characteristic of other large users,” Marsh said.
Oregon’s data centers account for 11% of all the state’s power consumption — more than double all the homes in Portland, combined.
“We need a data center rate class because data centers are a unique set of customers that are putting a unique and significant cost on the electric system,” Bob Jenks, executive director of the Citizens Utility Board, testified at a legislative hearing Thursday in Salem.
HB 3546 applies only to data centers served by investor-owned utilities like Portland General Electric and PacifiCorp. Electric cooperatives that serve data centers in eastern Oregon already have the authority to shield residential customers from the costs of serving data centers, and there is some evidence they are doing so.
PGE supplied more than 1 million megawatt-hours of power to data center customers in 2023, Jenks said, more than double what it supplied just two years earlier. And consumption is continuing to rise, fueled by demand for artificial intelligence.
The burden of paying for new energy resources should be paid by those creating the need, according to Jenks.
“These data centers are not mom-and-pop shops,” Jenks said. “They’re run by the largest, richest corporations in the world, companies that can afford to pay their fair share of the costs they impose on Oregon’s grid.”
Many of the nation’s largest tech companies operate Oregon data centers, among them Amazon, Apple, Google, Meta, LinkedIn, TikTok and X (formerly Twitter). They’re all here for Oregon’s extraordinary data center tax breaks. The state’s data center industry saved more than $330 million in local property taxes last year alone.
Each site typically employs no more than a few hundred people — and sometimes far fewer. The social media site X received $4.6 million tax breaks on its Hillsboro data center last year, for example, even though it employs just three people there.
Data center operators nonetheless have significant clout in Salem. Two years ago, the industry beat back legislative proposals to rein in their tax breaks and make server farms subject to the state’s clean energy standards.
With HB 3546, though, there are signs the tech industry may be on board.
“We’re here today because we really want to work with you on this bill and are here as collaborators,” testified Ellen Zuckerman, Google’s head of energy market development for the Americas.
Google operates three data centers in The Dalles and is building two more. Zuckerman said the company wants to encourage development of “digital infrastructure” in Oregon. The bill could be a pathway to enabling that, she said, by helping assure utilities that there will be customers on hand when they invest in making more energy available.
In other states, she said, Google has backed regulation and legislation similar to Oregon’s bill, requiring multiyear agreements for new power loads and requiring big new energy customers to pay “significant” infrastructure charges.
Unlike Oregon’s bill, though, Zuckerman said the legislation Google has backed elsewhere also requires some form of “collateral” to ensure industrial customers can cover the costs they promised to pay.
Such a provision might help protect utilities from the possibility of a big customer walking away. It could also give an advantage to large companies like Google, who might have an easier time financing collateral than a smaller data center operator with a shorter track record.
In addition, Zuckerman said Google wants HB 3546 to apply to all new, large power loads — not just data centers. She said the current bill sets up a “concerning” precedent by singling out data centers and risks leaving out new, power-hungry industries that are yet to emerge.
“We think that there are many elements (in the bill) to like,” Zuckerman said. “We also think that there is need for improvement.”
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