Why Should Delaware Care?
The popularity of artificial intelligence has sparked a boom in the construction of energy hungry data centers. In response, the Delaware Electric Cooperative requested that state lawmakers pass a bill that it says would shield its system from being overwhelmed by the energy demands of the facilities.
Southern Delaware’s primary electric utility may soon be able to reject requests from large new energy consumers, including data centers, seeking to connect to the grid.
The State Senate on Thursday unanimously passed Senate Bill 276, which frees the Delaware Electric Cooperative from a requirement to serve “large loads” – defined as facilities that consume 50 megawatts of electricity or greater. That amount of electricity can power up to 50,000 homes.
Delaware Electric Cooperative CEO Rob Book said his utility had asked lawmakers to pass the bill.
He said the legislation would protect existing customers from price spikes if a national surge in the construction of data centers spreads to southern Delaware. Under current law, the utility would have to provide those facilities with power, even if it caused rates to go up.
“What this bill will really do is help us shield our existing members from that very high price spike,” Book said.
Several data centers have been proposed in northern Delaware recently. The largest could consume up to 1.2 gigawatts — or more than double the amount of electricity that the cooperative delivers to its entire coverage area at its peak time, Book said.
Book said if the requirement is lifted and a data center proposal comes to his utility’s service territory, he would require the facility to either generate its own power or contract with a third-party supplier.
State Sen. Stephanie Hansen (D-Middletown), the bill’s primary sponsor, said she “applauds” the utility for requesting this bill and planning to require data center developers to provide their own power.
“They’ve approached energy generation and supply to their customers in a reasonable way,” Hansen said of the utility.
Following its passage in the Senate, SB 276 will be next considered by a committee in the House of Representatives.
What about Delaware’s other electric utilities?
Delaware’s largest utility, Delmarva Power, also operates under the same state requirement to provide power to any company that requests it.
The utility’s Region President Marcus Beal previously cited this law when discussing potential electricity price increases that could follow new data center energy demand.
Those price increases could be substantial. Earlier this month, a state-commissioned study found that energy demand from data center proposals in Delaware could almost double wholesale energy prices.
While those potential price increases may still affect Delaware Electric Cooperative customers, Book said his utility is partially shielded from the full effects of such market trends because it owns power generation assets.
Unlike the Delaware Electric Cooperative, Delmarva Power has not asked state legislators to take away the requirement that it serve all potential customers, including large-load facilities, Hansen said.
When asked why the utility has not requested a similar bill, Delmarva Power spokesman Matthew Ford said in an emailed statement, “We do not believe it is appropriate for the company to serve as the sole arbiter of whether certain customers receive service.”
Ford pointed out that, unlike electric cooperatives, Delmarva Power is regulated by the Delaware Public Service Commission. He said the utility evaluates large loads “with the goal of supporting economic development while protecting existing customers from inappropriate cost shifts.”
“We believe that decisions of this magnitude are best addressed through that regulatory framework rather than through legislation granting unilateral discretion to utilities,” Ford said.
Asked whether the state legislature could unilaterally pass a bill that takes away Delmarva Power’s obligation to provide power to all potential customers, Hansen said “that is an interesting question and it’s one that I am looking into.”
Delaware’s state law does not require the Delaware Municipal Electric Cooperative — the third utility in the state that serves municipalities — to provide power to all that request it, Hansen said.
