Yahoo and Microsoft were the first tech companies to reach out to Grant PUD in the mid-2000s about building data centers on what were hundreds of acres of corn and bean fields in the rural farming community of Quincy, Washington. Looking back on it recently, the utility’s former general manager, Kevin Nordt, called those companies’ arrivals “a godsend.”

“Costs were going up, and there was extreme pressure from the rating agencies,” Nordt said of the companies that track institutional financial health and assign credit ratings.

Although financially strong today, Grant PUD faced a perfect storm of financial pressures at that time. The Central Washington-based rural utility’s original, 50-year license to operate its mid-Columbia River dams, Priest Rapids and Wanapum, entitled the utility to only 35% of their generation and obliged it to sell the rest at cost to a handful of long-term power purchasers outside the region. That arrangement was fine in the mid-1960s, when 2% of the dams’ combined generation capacity was enough to power the entire county, but the utility had grown to some 40,000 electric meters and had a thriving industrial corridor in the county’s largest city: Moses Lake. Grid upgrades were already necessary for anticipated growth.

Grant PUD had taken on more than $1 billion in costs during the decade-long process to apply for a new license with new terms that would allow it to benefit from almost 100% of its dams’ production as load grew. But the feds hadn’t yet issued the new license. In the interim, the utility turned to regional wholesale market purchases to cover the portion of load its dams could not. Market prices were coincidentally high at that time, influenced by fallout from utility-industry deregulation in the late 1990s and the California energy crisis. For a time, the PUD encouraged its industrial customers to switch from electricity to natural gas to power their operations.

Costly modernization upgrades to the electric grid and the turbine/generator units at Wanapum Dam were underway. And the new license would bring with it tens of millions of dollars in upgrade expenses needed for PUD recreation areas and investments in fish passage, fish hatcheries, and habitat improvements.

Grant PUD data shows load growth from 1994-2004 tanked from a typically healthy 4%-6% annually to less than 1%. Customers faced consecutive years of nearly double-digit rate increases—a harsh reality even for a utility with among the nation’s cheapest rates.

Grant PUD was overleveraged in debt, Nordt said. The financial team deferred expenses to avoid a decline in the credit ratings. Since then, careful budgeting, spending, refinancing, accounting, and continuous investment in assets have reduced debt to an acceptable level.

The scramble begins

Those 2005-2006 announcements by Yahoo, which later sold its Quincy data center to H5 Data Centers, and Microsoft came at the perfect time. Grant PUD was seeking industrial load growth to take full advantage of the conditions of its new license, finally issued in 2008. What decision-makers may not have expected is what would happen next.

Within about 15 years, seven large data center operators had planted themselves among Quincy’s tilled-and-irrigated fields. One data center in the industrial corridor of Moses Lake predated them all. State tax incentives, low-cost power, and lots of then-inexpensive, developable land were major attractions. Another big draw to Quincy was its location near major regional, long-haul fiber-optic routes that connected the Pacific Northwest.

Most of these data center operators are colocation data centers—they provide the infrastructure to host other companies’ servers. One data center is a hyperscaler. All are energy intensive. Many await more power for expansion.

Grant County’s port districts and Economic Development Council have promoted the opportunities in the county and welcomed these investments for their diversifying effect on the traditional agriculture economy. Growth of large industry, including data centers, had pushed Grant PUD’s average annual load from 341 average megawatts in 2004 to 757 average megawatts by 2025. The utility’s record peak system load, plus losses, was set during a summer heatwave in 2024 at 1,015 megawatts.

The first data center power requests totaled more than 100 average megawatts—a huge amount in those days for a utility more accustomed to receiving requests from 2 megawatts to 8 megawatts. Today, energy sold for data processing and large manufacturing accounts for more than half of Grant PUD’s average load and is expected to increase with known applications for new and expanded service.

That growth continues to be a heavy lift for Grant PUD, a public utility that’s big on generation, with dams capable of powering a city the size of Seattle, but with a geographically large county to serve; more than 4,000 miles of transmission and distribution grid to maintain; and fewer than 58,000 retail meters to help cover costs. Most of those meters correspond to residential, agricultural, and small general-service customer groups that pay at or below-cost for their power.

Stepping up

“Traditionally, Grant PUD was agriculture-based and residential,” said William Coe, engineer for grid system planning. He began his career at the utility in 1999. “Then came some industrial development in the Wheeler Corridor of Moses Lake. Planning back in those days was more traditional. Growth was slow and steady. Yahoo was the first that started the load-growth boom that was outside our areas already zoned for industrial.”

That meant an extension to broader Quincy of a 115-kV transmission line that was already serving the community’s ag-processing plants and a 230-kV line to initially support the data centers and new substations for Yahoo and Microsoft. The companies themselves paid for most of these upgrades. Over time, the hefty power bills all the large industrial customers have paid to Grant PUD have brought in needed revenue.

“The inadequate infrastructure in Quincy required substantial upgrades. It was a very different type of load than what we were used to,” Coe said. “Tech is very fast moving. They come in. They have an aggressive schedule. All of a sudden, we were exposed to this fast-track, high-accommodation-type model. We had to staff up to do what we needed to do to serve them.”

Growth was not just happening in Quincy, although the data centers were a big driver. New manufacturing companies were moving into Grant PUD’s traditional industrial corridor in Moses Lake. Port districts around the county were also eager for more electrical infrastructure. Expanding the capacity of the electric system has been a priority ever since.

The utility completed a $44.6 million package of upgrades in 2018 that included ground-up construction and/or rebuilds of eight substations. A second $144.4 million package is underway and includes a transmission line, five new substations, and upgrades to four substations, including the Mountain View Substation, which supplies Microsoft. A separate, $266.2 million package of projects includes construction or improvements to four substations and six transmission projects, largely to increase power supply and reliability to Quincy.

Last year, the utility assembled a team to oversee long-term planning of transmission needs and services and foster the most efficient use of the capacity on the Grant PUD transmission system.

Reducing risk

With the customer base growing, the horizon became clear around 2015-2016 that within about a decade, the county’s energy needs would exceed the capacity of Priest Rapids and Wanapum dams to supply them, especially at times of peak load or in low-water years in the Columbia Basin, when hydroelectric generation declines. Hydropower had gained value for its carbon-free qualities and available-on-demand capacity that make it ideal to fill in the gaps when solar and wind aren’t generating.

Seeking to reduce water risk; create a stable, predictable flow of income; and maximize the value it received from its hydropower, the utility launched a new tradition. Grant PUD sold a large portion of its dams’ clean-energy generation under a longer-term slice contract to a power purchaser. In exchange, the power purchaser assumed the water risk and provided the utility with lower-cost, mixed-resource energy to serve Grant PUD load.

Over time, this and smaller slice contracts have generated millions in revenue, helping keep rates low. Bond-rating agencies approved of the reduced risk and longer-term stability that further strengthened the utility’s finances. Slice contract sales have been the norm at Grant PUD ever since. That will likely change, as Washington’s clean-energy regulations and growing customer demand are expected to gradually lead Grant PUD to retain more of its carbon-free power to serve its own load.

Sorting out speculation

In 2017 and 2018, the value of the cryptocurrency bitcoin skyrocketed, and a market for a new type of energy-intensive industry flooded into the region. Requests for power soared to 2,000 megawatts, about 75% of which were from cryptomining facilities. That was enough to more than triple the average daily load that, up to that point, had taken the utility 80 years to grow.

Grant PUD’s staff and commission responded with a creative new, tiered electric rate that increased dramatically if total evolving-industry load grew beyond 5% of total load. The new rate and associated policy succeeded in managing risk while still allowing cryptocurrency mining to function. Studies are now underway to determine if crypto still presents the risk it once did.

The crypto boom may have brought energy speculation to the forefront for Grant PUD, but the evolving-industry rate wasn’t enough to stop it altogether. Grant PUD had raised its application fees, but apparently, not enough. By 2025, the power requests in the waiting queue totaled approximately 2,900 megawatts.

“The queue is one of the indicators the PUD uses to forecast its need for capital investments,” recently retired Vice President of Customer Solutions Andy Wendell said.

The risk of stranded assets—infrastructure built to supply a load that didn’t materialize—was real, Wendell said.

“Ultimately, our ratepayers foot the bill for stranded assets” he said. “We’ve taken action to shift those risks to the customers who are actually requesting the power.”

Wendell and his team proposed much higher up-front application fees—25% of the estimated construction cost on a dollar-per-megawatt basis—to cover engineering studies and system design. For example, an application for 40 megawatts of power increased from $52,000 to $4 million. The increases succeeded in whittling out the speculators and reducing the size of the 2,900-megawatt queue to 792 megawatts—the number of applicants willing to pay to stay in the queue.

“The 792 is still a large number, but we have higher confidence in the load being there if we invest and build the infrastructure to serve the load,” Wendell said.

Adding it up

Over the last 25 years, Grant PUD has invested more than $875 million in its electric system to respond to growth; create a safer, more reliable system; and improve operational and billing efficiency by transitioning to advanced, remote-read meter technology. That amounted to 1% to 9% of its annual budgets over time.

Along the way, the utility has had to balance this and its other expected and unexpected capital expenses. In 2015, a large, horizontal crack, a “separated lift joint,” was discovered along part of the Wanapum Dam spillway. The $62.4 million repair required an extensive system to anchor the entire spillway solidly to bedrock. A similar anchoring project began this year at Priest Rapids Dam, about 22 miles downriver of Wanapum, to prevent a similar emergency and to meet a federal requirement to improve the dam’s resilience to a strong earthquake. Also to improve seismic resistance, the utility built a compacted-concrete embankment parallel to Priest Rapids Dam’s right earthen embankment. The project cost just over $86.6 million. A similar project at Wanapum Dam may also be necessary.

Today, Grant PUD is working to meet the growing needs of its customers by making strategic investments in its dams and electric system, including more transmission and transmission services, while continuing to explore ways to increase power supply and capacity.

“These last two decades have been challenging,” said John Mertlich, Grant PUD general manager and CEO. “We’ve worked with our elected commissioners to keep this utility sustainable, drawing from lessons learned in our past. That same approach will power this rural utility into the future, at the lowest rates possible for all our customers.”