New Penalties Target Large-Load Forecasting Discrepancies
The Oregon Public Utility Commission (PUC) has approved a proposal by PacifiCorp to penalize large-load customers, including data centers, that fail to align their energy use with forecasted needs at new facilities. This decision, aimed at safeguarding grid reliability and cost efficiency, has sparked significant industry opposition.
The Portland-based utility argues that these measures will incentivize customers to provide more accurate energy forecasts, ensuring better grid management and reducing unnecessary investments. “The scale of utility procurement and stranded asset risk associated with these loads creates a risk difference not only of degree, but of nature,” the commissioners stated in their ruling.
Addressing Stranded Asset Risks and Ratepayer Protections
PacifiCorp emphasized that the new rules are necessary to protect its broader ratepayer base from the financial burden of grid investments that do not materialize. According to the utility, large-load customers signed agreements for approximately 13GW of new load between 2020 and 2023, far exceeding the utility’s 2023 peak demand of 10GW. However, only 20 percent of requested load typically materializes within the first one to three years of service.
By implementing a five percent buffer for forecasting errors, PacifiCorp aims to mitigate risks associated with stranded assets and unutilized resources. “These rules are a step towards ensuring a sustainable and reliable grid,” a PacifiCorp spokesperson commented.
Industry Pushback and Concerns Over Discrimination
Despite the utility’s rationale, the proposal has faced strong opposition from key stakeholders, including Meta, the Data Center Coalition, and the Association of Western Energy Consumers. Critics argue that the penalties could unfairly target large companies, forcing them to bring capacity online prematurely.
Meta expressed concerns about discriminatory practices, stating, “If the company has historical information suggesting that it should not plan for all load to materialize exactly as customers forecast, it is the responsibility of a prudent utility operator to plan accordingly.”
The tech giant also suggested that the five percent buffer should apply only when loads fall below 60 percent of the reserved amount, providing more leeway for unforeseen changes in demand.
Regulatory Staff Support with Reservations
While the Oregon PUC’s regulatory staff supported PacifiCorp’s changes, they raised concerns about the potential for stranded assets and the possibility of cost shifting to other customer classes. “It’s crucial to deploy or acquire resources judiciously to avoid inefficiencies caused by unfulfilled large-load forecasts,” a regulatory staff member noted.
Implementation Timeline and Regional Expansion Plans
The approved rules are set to take effect in February 2025, giving customers over a year to adjust their forecasting practices. PacifiCorp has also signaled intentions to extend these rules to its service areas in Utah and Washington, further solidifying its commitment to accurate forecasting and efficient grid management.
Growing Energy Demands in the Pacific Northwest
The new rules come at a time of increasing energy demands across the Pacific Northwest. Industry experts warn that data center capacity in the region could reach 4,000MW within the next five years, potentially straining the power grid. This context underscores the urgency of proactive measures to balance supply and demand effectively.
FAQ
Why did PacifiCorp propose these penalties?
PacifiCorp proposed the penalties to encourage more accurate energy forecasting by large-load customers, reduce stranded asset risks, and protect other ratepayers from unnecessary costs.
How will these penalties affect data center operators?
Data center operators will need to provide more precise energy forecasts and may face penalties if their actual usage significantly deviates from their projections.
What is the five percent buffer?
The buffer allows for minor forecasting errors by customers. Penalties will apply only if usage deviates by more than five percent from the forecasted load.
When will the new rules take effect?
The rules are scheduled to take effect in February 2025, giving customers time to adapt.
Are other states adopting similar rules?
PacifiCorp plans to expand these measures to Utah and Washington, indicating a regional approach to managing large-load forecasting.
