Oregon’s Pacific Power is set to charge new data centers directly for all the energy infrastructure costs their operations require, marking a significant move to prevent residential and other customers from subsidizing the booming demand of server farms.
- Data centers to pay for all new energy projects and upgrades they require
- Utility rates for other customers expected to stabilize or decline
- Oregon Public Utility Commission reviewing final approval in November
What happened
Pacific Power, Oregon’s second largest investor-owned utility, has agreed to assign the full costs of additional energy infrastructure needed to serve data centers directly to those data center operators. This agreement follows collaborative negotiations with the Oregon Public Utility Commission, the Citizens’ Utility Board, and advocacy groups to implement provisions of the state's POWER Act.
The POWER Act requires the state’s monopoly electric utilities to create a separate rate class for data centers to prevent other customers from subsidizing their rapidly growing electricity demand. This deal ensures that data centers will cover costs for new power plants, batteries, transmission lines, and all necessary grid upgrades related to their consumption.
Why it feels good
With data centers comprising nearly 25% of Oregon’s retail electricity sales and utility rates having climbed steeply since 2020, this new pricing structure promotes fairness by aligning costs with who drives energy demand. Other customers, including residents and small businesses, can expect more stable or even reduced electric bills as they will no longer indirectly subsidize data center operations.
Pacific Power’s approach goes beyond the previously approved Portland General Electric model by covering all infrastructure costs needed for data centers, even if upgrades benefit other users. This sets a precedent for equitable energy cost distribution, supporting community trust and encouraging responsible energy growth.
What to enjoy or watch next
The Oregon Public Utility Commission plans to review and likely approve Pacific Power’s proposal in mid-November. Meanwhile, the Data Center Coalition representing tech companies has indicated intentions to appeal aspects of the agreement, continuing to seek adjustments in how costs are allocated.
As these discussions progress, consumers and stakeholders can watch for how this model influences utility pricing statewide. The agreement highlights Oregon’s proactive stance in balancing economic growth with community energy fairness, potentially serving as a model for other states managing data center expansion.