Experts outline tariff, interconnection and flexibility tools to prevent cost shifts from data centers

Experts from Lawrence Berkeley National Lab (Natalie Frick) and Brattle (Long Lam) presented a synthesis of how utilities and regulators nationwide are managing rapid growth in large electric loads — notably data centers — that can drive substantial distribution and transmission upgrades.

Frick summarized three interconnection approaches that increase transparency and reduce speculative risk: a staged interconnection process (pre‑application consultation; study phases; construction authorization), rulemaking that establishes timelines and roles (for example California’s expedited connection rules), and tariff‑embedded interconnection requirements (Idaho Power’s speculative high‑density tariff that requires developer cost deposits and true‑ups). “If you can standardize the process and tie stages of developer commitments to stages of study and construction, you reduce speculative exposure that could otherwise leave ratepayers on the hook,” Frick said.

Long Lam described tariff design choices and consumer protections: direct cost assignment versus system averaging, incremental vs. embedded cost bases, and mitigation tools such as collateral, minimum demand charges, multi‑year contract lengths (10–15 years), exit fees, and requirements that customers provide interruptible or demand‑flexibility capacity. He noted regulators are moving away from industry‑specific tariffs (e.g., singling out data centers) toward eligibility thresholds by load size to avoid legal challenges.

Committee action: ETIC members voted to ask staff to draft a “large‑load cost‑shift” bill concept to preserve consumer protections and set statutory guardrails for cost allocation. The committee emphasized the draft should (1) prohibit direct cost shifting to non‑participants, (2) allow utilities to recover prudent, incremental costs from the beneficiary customer subject to specific guardrails, (3) require standardized interconnection timelines and developer financial commitments, and (4) encourage demand‑flexibility options to accelerate connection.