Large-load requests are no longer an isolated issue for a handful of utilities. Data centers, advanced manufacturing, and other energy-intensive industries are looking across the Northwest for sites with reliable power, available land, and competitive rates. At the same time, the region’s supply picture is tightening. The Northwest Power and Conservation Council’s draft Ninth Power Plan projects annual energy demand growing from roughly 22,000 average megawatts today to between 31,000 aMW and 44,000 aMW by 2046, with data centers contributing to much of this growth.
While this growth can present opportunities for consumer-owned utilities, it can also create substantial risk if a utility begins planning, purchasing power, or constructing facilities before it has established who pays, who bears the risk if the project changes, and how limited system capacity will be allocated. Public power utilities should therefore consider adopting policies for large-load evaluation, interconnection, and service before the next major request arrives.
A policy should cover more than interconnection
Physical interconnection is only one piece of the puzzle for managing large loads. For many projects, the greater risk exposure may arise from generation, wholesale power purchases, transmission reservations, capacity commitments, and the possibility that the customer never reaches its projected load.
A good policy should govern the entire process—from the first serious inquiry through studies, capacity reservation, construction, and long-term service. Its basic philosophy can be stated simply: growth should pay for growth, and legacy customers should not bear costs or risks created by a new large load.
Utilities should also establish a clear threshold for what constitutes a “large load,” covering new facilities and expansions of existing loads.
Start with cost reimbursement
The first step for any large load should be contractually committing to pay all of the utility’s costs and cover its risks. Before utility staff spend any material time on engineering, power supply analysis, coordination with the area’s power marketing administration, transmission studies, legal work, or outside consultants, the prospective customer should agree to pay the utility’s costs and provide an advance deposit. Deposits should be replenished as work proceeds, and the customer should remain responsible for costs if the project is withdrawn.
This protects existing customers from subsidizing speculative development and creates a clean framework for recovering internal labor and third-party expenses. The agreement should make clear that payment for studies does not guarantee service or reserve capacity. Last, consider establishing work orders or other timekeeping codes at the outset to track internal labor costs.
Separate wires from power supply
Studies should consider distribution and substation upgrades, transmission constraints, resource adequacy, hourly and seasonal load shape, ramp rates, redundancy, power quality, customer-owned generation, and potential load flexibility. Utilities should also evaluate whether serving the load requires new long-term resource or transmission commitments. Many large loads must also be studied by the Bonneville Power Administration, Western Area Power Administration, or other affected systems to ensure grid capacity and protect reliability.
A load may be physically capable of connecting to a substation while still presenting a tricky power supply or transmission problem. The policy should expressly separate interconnection feasibility from the availability and cost of power and transmission. This matters because stranded-cost risk can dwarf the cost of the physical interconnection. If a utility signs a long-term power purchase or reserves transmission for a 100-MW customer that later delays, downsizes, or closes, the customer needs to keep the utility whole.
Protect against stranded costs
A large-load policy should require financial security commensurate with the utility’s exposure. Depending on the project, that could include a combination of advance payments, cash deposits, letters of credit, parent guarantees, surety bonds, or other credit support. Security may be posted in connection with various phases of a project, including construction of facilities and the ultimate provision of electric service.
The goal is to align risk with the party creating it. Existing customers should not become involuntary guarantors of a private development project. The same principle should apply to infrastructure. A customer should generally fund facilities and system improvements required to make its service possible. If a utility chooses to share costs when an upgrade independently benefits other customers, that should be an affirmative determination rather than an automatic subsidy.
Don’t forget BPA’s NLSL requirements
For BPA power customers, a large-load policy also needs to account for the Northwest Power Act’s new large single load rules. An NLSL generally arises when a new or expanded facility grows by 10 average megawatts or more during any consecutive 12-month period. BPA, rather than the retail utility or customer, makes the relevant NLSL determinations.
That threshold may be different from the utility’s own policy threshold. For example, a utility may sensibly apply its large-load process at 1 MW while separately screening projects for potential NLSL treatment. The utility’s policy should require customers to provide the information needed for BPA compliance and require BPA-related and other load-specific costs to be assigned to the large-load customer. Those may include liquidated damages imposed on the utility by BPA if the load is determined to be an NLSL during a period when the load was being served with federal preference power.
Contracting for electric service
Before capacity is firmly reserved or the new load is energized, the parties should execute an agreement for electric service. The agreement should cover issues including contract demand, load forecasting, rates, security, minimum billing/take-or-pay amounts, stranded-cost protection, termination damages, curtailment rights, and responsibility for BPA/WAPA or transmission-related costs. If the load is an NLSL served by nonfederal resources, special attention should be paid to the mechanisms for procuring nonfederal power, to avoid stranded resource risk.
Establish protections now
Perhaps the greatest value of a large-load policy is institutional. It provides staff and customers with a clear process. Without a policy, each major request can become an ad hoc negotiation conducted under commercial pressure and compressed development schedules. Staff may be asked to answer questions about capacity, rates, and construction before the governing board has determined the principles that should control those answers. A board-adopted policy reverses that sequence. It establishes the rules before the utility knows who the next applicant will be.
The Northwest needs economic growth, and public power utilities can play an important role in enabling it. But growth is sustainable only when it preserves reliability, protects affordability, and fairly assigns the costs and risks that accompany it. For large loads, the best time to establish those protections is before the next large load arrives.
