Oregon Utility Reviews PGE Plan Amid Data Center Cost Concerns

Concerns are rising in Oregon as the Citizens Utility Board (CUB) challenges the Portland General Electric (PGE) proposal for cost allocation regarding data centers. CUB claims that PGE is circumventing the newly enacted POWER Act, which mandates that data centers bear their own energy expenses.

Oregon Utility Controversy

The CUB, established in 1984 as a consumer advocacy group, argues that PGE’s proposed cost-sharing framework places an unfair burden on residential customers. According to their analysis, PGE intends to allocate 34-45% of the new power supply and transmission costs to residential users, despite data centers being the key contributors to rising electricity demand.

PGE’s Defense of the Proposal

PGE defends its plan by introducing the Peak Growth Modifier, a tool designed to ensure that those responsible for peak demand growth absorb the related costs. The company explained that this modifier enables regulators to assess growth patterns and allocate infrastructure costs more accurately.

• Timeline for Decision: The Oregon Public Utility Commission will review PGE’s plan and a decision is expected by April 2026.
• POWER Act Features:
  • Creation of a new customer class for energy use over 20 megawatts.
  • Infrastructure cost-sharing mechanisms.
  • Protections for customers and long-term contracts for data centers.

PGE emphasized that their new rate structure is intended for shared infrastructure rather than costs associated directly with a single customer. This change is anticipated to lead to significant rate increases for data centers while possibly reducing costs for other customer classes.

CUB’s Concerns and Arguments

The CUB believes PGE’s plan misinterprets the intentions of the POWER Act, potentially shifting significant costs onto residential customers. Bob Jenks, Executive Director of CUB, highlighted that several substations constructed for data centers, costing $174 million, do not serve residential customers at all. Yet, PGE’s plan would inappropriately allocate a portion of these costs to residential customers.

• Supporting Efficiency: CUB argues that residential customers have historically funded energy efficiency programs that reduce peak usage significantly.
• Time Limit Issues: The three-year cost allocation period under the Peak Growth Modifier does not reflect the long-term nature of grid investments.

This could worsen affordability challenges for households, as residential customers have experienced a 50% increase in rates over recent years. CUB requests tighter, longer-term cost responsibility for data centers to protect residential ratepayers.

Impact of Data Centers on Electricity Consumption

Data centers, vital for the expanding AI economy, currently make up 6% of Oregon’s electricity consumption but are projected to rise to approximately 20% by 2030. Oregon hosts 138 data centers, emphasizing their rapid growth.

Electricity and Resource Usage

Nationally, U.S. data centers consumed about 183 terawatt-hours of electricity in 2024, accounting for around 4% of overall electricity usage. Some reports suggest that typical AI-optimized data centers may utilize as much electricity as 100,000 homes each year.

As data centers continue to proliferate, the implications for energy costs and resource usage will remain a critical issue for regulators and residential consumers alike. The outcome of the PGE proposal will likely influence the future dynamics of electricity distribution across Oregon.