QTS Data Centers in Hillsboro on Oct. 11, 2024. (Rian Dundon/Oregon Capital Chronicle)

The POWER Act creates a separate rate class for data centers so their grid expansion and infrastructure needs are paid for by tech companies that own them

 

Oregon is close to ensuring data center owners pay what they owe for their growth following several years of painful residential electricity hikes driven in part by rising energy demand from the facilities.

House Bill 3546, also called the POWER Act, passed the Senate on a party-line vote Tuesday and with bipartisan support in the House on Thursday. Five Republican representatives voted with Democrats to pass it, and Gov. Tina Kotek is expected to sign it.

State Rep. Bobby Levy, R-Echo, was one of two Republicans excused from voting on bills Thursday. Levy’s family business in 2021 sold farmland to Amazon for a data center and receives wastewater used for farm irrigation from another Amazon data center. But under Oregon law, she would have had to vote on the bill if she had been on the House floor.

The POWER Act would clear the way for the Oregon Public Utility Commission to ensure charges for grid expansion and infrastructure needed to power data centers are not passed onto residential and commercial customers by creating a separate customer class for data centers. Those centers are the fastest-growing energy users in the state. The state’s Public Utility Commission, a three-person governor-appointed group, is charged with regulating the rates of privately owned electric and gas utilities in Oregon.

Shannon Kellogg, a lobbyist and vice president for Amazon, said on LinkedIn that company officials asked Oregon lawmakers more than a month ago to pause consideration on the bill so they could allow more time for “a more comprehensive solution that advances shared goals without unintended consequences, or consider additional amendments.”

The bill’s chief sponsor, Rep. Pam Marsh, D-Ashland, noted in a news release following the vote that a single 30 megawatt data center uses as much energy in one year as the entire city of Ashland, and can be built in less than two years.

“The POWER Act focuses on a subset of energy users that have a massive impact on the electrical grid,” she said. “That demand is unique and requires a distinct solution.”

The bill also applies to Bitcoin mining facilities, but exempts a number of other heavy energy users, such as semiconductor manufacturers, and applies only to new contracts data centers and Bitcoin facilities make with electric utilities. That means only newly built ones, or existing ones that require more energy and infrastructure down the road, will fall into the new rate class.

Rising demand

Charlotte Shuff, a spokesperson for the watchdog Citizens’ Utilities Board, said other states and Oregon are seeing demand grow for companies that want to build processing centers for Artificial Intelligence. Those are more like 250 megawatt data centers, which would consume in one year the same amount of energy as the entire city of Eugene.

Oregon’s data center market is the fifth largest in the nation, according to Chicago-based commercial real estate group Cushman & Wakefield. Amazon, Apple, Facebook, Google and X, formerly named Twitter, have massive data centers in eastern Oregon as well as in The Dalles, Hillsboro and Prineville that require enormous amounts of energy to operate. Amazon data centers in eastern Oregon have caused 554% load growth at the Umatilla Electric Cooperative in just the last ten years, according to a Sightline Institute analysis of US Energy Information Administration data.

Between 2013 and 2023, Oregon’s overall electricity consumption rose by more than 20%, the analysis found.

“Data centers undoubtedly drove a major share, if not almost all, of this growth,” analysts wrote. Four Electric utilities — including the two biggest utilities in Oregon: Pacific Power and Portland General Electric, or PGE — absorbed 75% of that load growth from the data centers.

Rising costs

Hundreds of thousands of residential customers of Oregon’s three private, investor-owned electric utilities have struggled to keep up with double digit rate hikes since 2020.

The state’s Public Utility Commission approved a 5.5% increase in December for residential customers of PGE and a nearly 10% increase in residential electricity rates for Pacific Power customers. Overall rates for residential customers of both utilities — which collectively serve more than 1.4 million customers in Oregon — are now up about 50% since 2020, with the Public Utility Commission approving increases nearly every year for the past five years. Residential rate increases have risen more than twice the rate of inflation during that period.

A record 64,000 Oregonians had their power shutoff for nonpayment at some point in 2024, according to the Citizens’ Utilities Board.

Johnny Earl, president of SEIU Local 503, a statewide union representing about 72,000 caregivers and other professionals, said in a news release that the bill is about fairness.

“Working families, low-income households, and small businesses — already stretched thin in a worsening economy — cannot subsidize the massive energy demands of corporate tech giants,” he wrote.