Delaware is struggling to find its own way of protecting consumers from more rises in electric rates amid plans for energy-hungry data centers that would sharply increase demand beyond the current capacity of new supply.
The debate is expected to continue even though the state’s Department of Naturel Resources and Environmental Control on Wednesday blocked the massive Project Washington data center project in New Castle County, saying it would have violated the Coastal Zone Act, and leaving that project in limbo.
Amid national and regional efforts to stop retail bills soaring as some new data centers plug into the grid, one piece of legislation that would give the Delaware Public Service Commission authority to approve or deny any project that uses at least 100 megawatts of electricity failed to advance from committee last week -- despite an amendment to increase the threshold for power demand by large energy users, reflecting business concerns. Some lawmakers argued that the measure would deter developers of data centers, depriving the state of their economic benefits.
The stalled bill, SB205, would for the first time give the state authority over plans by large energy users to connect to the grid. Its supporters, led by the prime sponsor, state Sen. Stephanie Hansen (D-Middletown), say the state has a duty to protect retail customers from higher rates.
Hansen denied that the bill aims to stop data centers being built in Delaware, as argued by some critics, but said it would allow the state to decide on a large-load application, based in part on how it would affect consumers.
“This is not a bill to stop economic development,” Hansen told the Senate’s Environment, Energy and Transportation Committee that she chairs last Wednesday. “This is a bill about protecting Delaware ratepayers from increasing electricity costs and decreasing electricity reliability. It gives the Public Service Commission the ability to put up guardrails protecting Delawareans prior to the applicant connecting to the transmission system.”
The bill first defined a large energy user as one using at least 30 megawatts but Hansen later increased that to 100 MW after pressure from the business community and public comments by Gov. Matt Meyer that the 30 MW limit was too low.
“This is not a bill to stop economic development. This is a bill about protecting Delaware ratepayers from increasing electricity costs and decreasing electricity reliability."State Sen. Stephanie Hansen (D-Middletown
On Wednesday, Hansen welcomed DNREC’s decision to block Project Washington but said that didn’t mean Delaware won’t face other data center projects because of surging national demand for the giant complexes. The real value of the DNREC move, she said, was to “buy time” for Delaware to determine how to ensure that retail ratepayers don’t pay for the addition of such large loads.
Dustyn Thompson, director of the Delaware Sierra Club, and a member of Hansen’s Energy Stakeholders Group, also predicted that Starwood will come back, perhaps with a more sustainable plan for Project Washington, despite DNREC’s rebuff.
“I don’t think this is a ‘no’ forever. I don’t think this is the last time we’ve heard about this project but I do think he’s serious that it’s not a ‘yes’ at any cost,” Thompson said, referring to Gov. Matt Meyer, who has said consumers should not have to pay higher bills if big new energy users plug in to the grid.
Starwood said the project remains on track even after DNREC’s decision.
“We are absolutely confident the project will be successfully completed, and remain on track despite this decision,” the company said in a statement. “We are committed to working with DNREC, state and local regulators, and the entire community to make certain that Project Washington will be a state-of-the-art campus that will bring thousands of jobs to Delaware.”
The imbalance between demand and supply caused the wholesale price of electricity in the PJM area to increase by almost 10 times over the year between its auctions for 2024/25 and 2025/26, Hansen told the panel. In the latest PJM auction in December, the price continued to rise, to about $333 from $269 per megawatt-day.
In January, Delmarva Power proposed a $67.8 million rate increase that would mean, according to Delaware’s Public Advocate Jameson Tweedie, a rise of about 23 percent for customers who use electricity for heating. Customers who don’t use electricity for heating would pay an extra 16 percent.
Delmarva said it understands public concern about rising energy costs, and wants to address that. “We are eager to work with all officials and stakeholders on an “all-of-the-above” approach to energy affordability, while also ensuring the continued safe and reliable service our customers count on. We agree that something needs to be done, but we cannot allow our customers to be left in the dark due to underinvestment in the energy delivery system,” the company said in a statement.
Unless the commission is given the authority to evaluate the effects of a large load application, Delaware ratepayers won’t be protected from such increases because no federal agency has that authority, Hansen said. “These are new times, with conditions that we have not seen before, and we must rise to meet that challenge,” she said.
State Sen. Brian Pettyjohn (R-Georgetown) asked Sen. Hansen why developers should build data centers in Delaware, with benefits in job creation and tax revenue, if they can do so in surrounding states without being subject to the requirements of the bill, if it becomes law.
“Rather than advancing legislation that would slow projects and hurt jobs, we believe that Delaware should encourage more power generation."Delaware Contractors Association exec. director Sean Matthews
Hansen replied that the question would have been hard to answer even six months ago. Then, state competition for data centers was “the wild west” but now states understand they have to weigh more than just job-creation and tax revenue when deciding whether to approve the projects.
Sen. Eric Buckson (R-Dover South) said the easiest action for him would be to vote against the bill because of public opposition to it but he said he now wants to take a more considered approach before deciding. “I don’t want to be restrictive because I don’t see a future where AI doesn’t exist,” he said.
Sean Matthews, exec. director of the Delaware Contractors Association that includes union and non-union members, urged the committee to vote against the bill, saying it would “inject uncertainty” into the multi-year, multi-billion dollar decisions businesses make on whether to build large industrial facilities.
“Rather than advancing legislation that would slow projects and hurt jobs, we believe that Delaware should encourage more power generation,” Matthews said.
In later comments to Delaware Public Media, Hansen rejected claims by Matthews and other trade unioni members at the committee that her bill would “chill” data center development, but she acknowledged that it could be seen that way.
“Any bill that seeks to impose additional review and requirements on data center development could be viewed as having a chilling effect,” Hansen wrote.
“The committee seemed to really latch on to one project rather than connecting to the bigger picture. Folks really don’t understand how the energy system works.”Delaware Sierra Club director Dustyn Thompson
She said she would work to “balance” the demands of unions for jobs and of electric consumers for reasonable rates.
Thompson of the Delaware Sierra Club blamed trade unions for the bill’s failure so far to advance from committee, saying that they had incorrectly claimed it was about Project Washington.
“The committee seemed to really latch on to one project rather than connecting to the bigger picture,” Thompson said before DNREC published its decision. "Folks really don’t understand how the energy system works.”
For the bill to have a chance of moving forward, there should be another amendment, Thompson said, making it clear that the PSC has an obligation to work with applicants but that if they don’t want to pay for upgrades in the system, the commission may deny the application if the bill becomes law.
After SB205 failed to advance from committee, Hansen promised to add new language that addresses the concerns of some members.
The bill “remains very much alive,” she said in a statement. “As discussed in committee, the majority of my colleagues support the intent of SB205. I appreciate the thoughtful feedback shared and am continuing to work with fellow senators to address their concerns and strengthen the proposal. I’m committed to moving this conversation forward and prioritizing policies that will ensure and protect energy reliability throughout our state."
Meanwhile, Gov. Meyer boosted the bill’s supporters when he told Delaware Public Media last week on 'Ask Gov. Meyer' that he too does not want to see people’s electric bills rise in response to heavy demand from energy users such as data centers.
"For large energy users, whether it was a data center or anything else, my standard is, number one, when you come into our state or set up a facility, you cannot increase electric rates on regular Delaware consumers, working families, by one penny,” he said in the monthly Ask Governor Meyer show. “That means you need to bring your own power or that means we need to charge you for the actual cost for the system of drawing that extra power."
Meanwhile, another bill, HB233, advanced in the House Natural Resources and Energy Committee last Wednesday, setting up a vote by the full House. The measure, sponsored by State Rep. Frank Burns (D-Newark), and Sen. Hansen, would require regulated utilities such as Delmarva Power that use 20 mw or more to pay a separate rate.
“Delawareans should not bear the burden of massive data centers coming into our small state, and siphoning energy from our already limited supply.”State Rep. Frank Burns (D-Newark)
The measure would also require the Public Service Commission to evaluate whether the new rates would raise rates for retail customers, promote efficiency, reliability and resiliency for all Delawareans, and whether it would help a utility meet its targets on adopting renewable energy, as well as state goals on greenhouse gas reductions.
“We have heard from our neighbors in other states how much data centers have hurt their communities, and how often the costs trickle down to ratepayers,” Rep. Burns said in a statement. “Delawareans should not bear the burden of massive data centers coming into our small state, and siphoning energy from our already limited supply.”
On Jan. 16, the Trump administration and the governors – including Gov. Meyer -- of all 13 states in the region of grid operator PJM said residential customers should not have to pay the costs of data centers connecting to the grid. Instead, those costs should be allocated to “load-serving entities” such as utilities that deliver power to end-users, the group said on Jan. 16.
On the same day, PJM delivered a long-awaited response to criticism that it has been far too slow to evaluate applications for new energy projects – many of them from renewable sources – that would help regional electric supply begin to match big new demand from data centers.
PJM, whose region is home to some 67 million people, said its plan seeks to serve data centers and other large-load customers while preserving affordability and reliability for existing retail buyers.
“This is not a yes/no for data centers,” said PJM board chair David Mills, in a statement. “This is, ‘How do we do this while keeping the lights on and recognizing the impact on consumers at the same time?’”
Among PJM’s prescription for responding to what it called “phenomenal” recent demand growth is a concept called Bring Your Own New Generation (BYONG) under which entities such as Project Washington would provide their own power to offset their additional load. But it said any such decisions would only be voluntary, and would be subject to decisions by the states.
“The states within PJM’s footprint retain the authority to determine how such frameworks are applied to individual retail customers,” PJM said. Its plan is subject to approval by the Federal Energy Regulatory Commission.
In New Castle County, Councilman David Carter, who has proposed an ordinance to protect local people from any negative effects of Project Washington, said the statements by PJM, the Trump administration, and the governors are only statements of intent unless they lead to tariff changes approved by FERC, and backed by new regulation at the state level.
“No cost-allocation policy can protect ratepayers unless new generation is actually built,” he said. “Regardless of policy alignment, permitting, financing and constructing new power plants takes many years. That timeline cannot be compressed to match the current pace of data-center development.”
County government has no authority over the most consequential decisions including wholesale electricity markets or generation planning. Those issues are a matter for the state, but the county can regulate issues such as siting, setbacks and noise, Carter said.
“Meaningful protection from higher electric bills and blackouts depends on state action and new generation, not county zoning,” he said.
Carter said his proposed ordinance, 25-01, is still before the council, and that he is “contemplating the extent to which I am willing to compromise” on it, given that it includes “reasonable guardrails” to protect communities from nearby data centers.
