Can Delaware protect its residents from big increases in electric rates resulting from a massive data center that would alone use half as much power as the whole state does in a year?
That’s the question claiming the attention of lawmakers, regulators, local officials and consumer advocates in Delaware and beyond as the developers of the Project Washington data center press ahead with plans that would draw a huge 1.2 gigawatts of power from the grid when the plant near Delaware City is fully operational.
Consumer advocates predict Delaware ratepayers will see much higher electric bills soon in common with tens of millions of households across a 13-state area of the Northeast and Midwest run by the grid operator PJM Interconnect where energy-hungry data centers are set to make an unprecedented increase in power demand.
While the Project Washington developer, Starwood Digital Ventures, says it will work to minimize electric rate increases, consumer advocates and some lawmakers say higher residential and commercial rates are inevitable because supply won’t keep up with demand, at least initially.
“If the proposed data center does not bring on-line its own generation and contribute to the costs to upgrade the transmission and distribution system to deliver that energy, then yes, ratepayers can expect higher electric bills as those costs will be socialized to all ratepayers,” said state Sen. Stephanie Hansen (D-Middletown), who chairs the Energy Stakeholders Group of lawmakers, consumer advocates, environmentalists, and energy executives.
It's unclear how much more consumers will pay or when, given that Project Washington is in its early planning stages, Hansen said. But she noted that the environmental group Natural Resources Defense Council estimated the average ratepayer in the PJM area will pay $70 a month more by 2028.
That’s why Hansen and her allies are urging Project Washington to supply all or some of its own power. That would bring it into line with some other data-center power sources such as the restarted Three Mile Island Unit 1 near Harrisburg, Pennsylvania, which is due to supply nuclear power exclusively to the tech giant Microsoft starting in 2027, subject to regulatory approval.
“If we take the position that the data center must supply all of its own energy, then in effect, we are saying that the data center cannot be built at this time."State Sen. Stephanie Hansen (D-Middletown)
Having a power supply that is wholly or partly dedicated to a data center is among requirements that would be set by the Public Service Commission if a bill, SB205, introduced by Hansen in September, becomes law. The bill would give the PSC authority to issue a Certificate to Operate to any business using at least 30 megawatts of electricity – much less than Project Washington would use. The issuance would also be based on factors including how the business would affect ratepayers; how it would affect the state’s economy, and how the plan would affect its efforts to hit greenhouse gas reduction targets.
Ideally, data centers should provide all their own power, but building a new generation plant is a “tall ask”, and so the bill does not insist that centers meet 100 percent of their own demand, Hansen said.
“If we take the position that the data center must supply all of its own energy, then in effect, we are saying that the data center cannot be built at this time,” Hansen said. “This is because the time to bring on new generation is longer than the time to construct the new data center.”
She denied the bill represents the legislature seeking to control the data center industry but said it gives the PSC the authority to set the prescribed standards. The measure is supported by Gov. Matt Meyer, the State Energy Office, Delaware’s Public Advocate, and 12 cosponsors, in addition to the PSC itself, Hansen said in late November. The bill was discussed at two meetings of the Energy Stakeholders Group, and no-one opposed it, she added.
“We can’t afford to continue to put more burden on the ratepayers because they are already paying enough. Anything that would cause ratepayers to pay more, I would not be in favor of.”State Sen. Bryant Richardson (R-Seaford)
Dustyn Thompson, director of the Delaware Sierra Club, and a member of the Energy Stakeholders Group, said the bill would empower the PSC to do what’s best for the state.
“The PSC would be able to say ‘This is not good for the state, it’s not good for the people’. It gives them some leeway to really dig into these projects and if they are not in the best interests of the state, they can say ‘no’ by not giving a certificate to operate,” he said.
One sign that Hansen’s bill may have bipartisan support comes from Sen. Bryant Richardson, (R-Seaford), who said he might vote for it, especially because ratepayers should not have to pay still-higher energy bills.
“We can’t afford to continue to put more burden on the ratepayers because they are already paying enough,” Richardson said. “Anything that would cause ratepayers to pay more, I would not be in favor of.”
He said nuclear power should be used to meet the energy needs of data centers and other growing demands such as electric vehicles.
To address concerns about big energy users driving up residential or commercial energy bills, the PSC in September opened a docket to develop a “large load tariff” for users of at least 25 MW, and to pause connection with the grid until that tariff is set, following a request from PSC staff and the Delaware Public Advocate.
On Tuesday, Gov. Meyer acknowledged that ratepayers could face higher electricity bills if data centers aren’t managed sustainably.
“There is a real risk that ratepayers could face higher electric bills if data center growth and the buildout of corresponding power generation are not managed carefully,” Delaware’s Public Advocate, Jameson Tweedie, said in a statement on behalf of Meyer. “That’s exactly why the Governor supports the petition for a large-load tariff at the Public Service Commission to address the cost impacts of data centers in Delaware. Their goal is to ensure that as many of the additional costs associated with data centers as possible are reflected in the rates charged to those facilities—not shifted to Delaware families and small businesses.“
Outside Delaware, concerns about how data centers will affect ratepayers’ bills are expected to be addressed by the board of PJM this month. The grid operator’s governing body will decide on proposed rule changes that would address grid-reliability concerns raised by the boom in data-center construction. The decision will be the latest stage in PJM’s Critical Issue Fast Path stakeholder process, launched in August.
About a dozen proposals including those from Delaware officials are intended to prevent blackouts and price increases for some 67 million people in the PJM region, and include plans to require data centers to supply their own power.PJM’s board is not required to adopt any of the proposals but some of its members have publicly welcomed some of the ideas. Still, none of them garnered approval for further consideration by at least two-thirds of PJM members at a meeting in late November. The board is now expected to decide this month how to proceed.
“The losers will be people who are concerned about climate change, and rate costs for everybody else. Where the question is not ‘should we connect these data centers’ but ‘how fast can we do it?” I think you are losing the plot there.”Delaware Sierra Club director Dustyn Thompson
Thompson of the Delaware Sierra Club fears PJM won’t adopt a green agenda in deciding how to respond to data centers because it’s dominated by fossil fuel interests, and is subject to approval by the Federal Energy Regulatory Commission, which is part of the Trump administration.
“The process is going to be really good for fossil fuel generators because they have the largest stake both on the board and in the membership,” Thompson said. “The losers will be people who are concerned about climate change, and rate costs for everybody else. Where the question is not ‘should we connect these data centers’ but ‘how fast can we do it?” I think you are losing the plot there.”
If the prospects for SB205 appear to be bright, they are not matched by a proposed ordinance on data centers at New Castle County Council, which tabled the measure in mid-November after objections by Councilwomen Janet Kilpatrick and Councilman Brandon Toole. She claimed the measure, introduced in August by Councilman David Carter, would stop data centers being built in New Castle County, which would then miss out on job creation and tax-revenue benefits claimed by Starwood. The current version would require data centers to be built no closer than 1,000 feet from homes, and that they comply with water-use rules.
Even though she objected to some parts of Carter’s measure, Kilpatrick said the data center should over time provide its own power, helping to protect ratepayers.
“This proposal is a 10-year buildout. Over those years, they should be building electric generation, in sync with the buildings. And with each building they should be using the most up to date systems,” she wrote in an email.
At a council meeting in mid-November, Kilpatrick and Toole submitted amendments to the ordinance that Carter said may end up gutting it and would be “very disrespectful to the public”.
Carter said on Dec. 1 he’s working with the county’s Department of Land Use to determine whether there’s any “responsible middle ground that would still maintain meaningful protections for residents.” He didn’t know whether that review would be ready in time to take the bill off the table at the next council meeting on Dec. 9.
Carter said he wasn’t clear on Kilpatrick’s aims but, “It appears her preferred approach is to stop the ordinance, which would align with the interests of certain developers and land-use attorneys who have long opposed any form of common-sense regulations.”
Meanwhile, Carter called on Starwood to say how it estimated that $77 million a year in tax revenue would flow to New Castle County once Project Washington is up and running. “None of the underlying calculations, valuation methodologies, or factual assumptions underlying these claims have been provided for public review,” Carter said in a letter to Starwood on Nov. 28.
Given the scale of the project, and Starwood’s use of its revenue projections for influencing the opinions of the public and lawmakers, the public has a right to know how the “exceptionally high levels” of tax revenue and broader economic benefit were calculated, Carter said.
He said there had been “insufficient due diligence” on Fisker, Bloom Energy and the expansion of AstraZeneca, all of which won public incentives but failed to produce promised economic benefits.
Starwood declined to comment on Carter’s new claims.
But, the proposed amendments to Carter’s ordinance represent a recent increase in public support for Project Washington, argued Jim Lamb, a spokesman for Starwood.
One sign of growing public support is a Project Labor Agreement to cooperate on the construction of the Project Washington campus, signed in late October by the State Building and Construction Trades Council of Delaware and 20 local unions representing plumbing, roofing, sheet metalworking and other trades, together representing some 4,800 workers, Starwood said.
“There has been a sea-change on Project Washington’s application,” Lamb said in a video call. That has been shown by New Castle County Council’s analysis and by the proposed changes to Carter’s ordinance. He predicted the same thing will happen with SB205 in the legislature.
