Panel weighs bill to require large energy users to shoulder grid costs

House Bill 3546 would require the Oregon Public Utility Commission to establish a separate class of service for large energy users that consume 20 megawatts or more, including data centers, and to assign to that class the incremental costs needed to serve them, the House Climate, Energy and Environment Committee heard March 6.

Sponsor Representative Pam Marsh told the committee that rapid data‑center growth has concentrated system growth in a single customer class and risks shifting the cost of new transmission, distribution and capacity to residential ratepayers. “We just want them to pay their own bills,” Marsh said, arguing that large users should not offload the infrastructure costs they cause onto customers who did not require those investments.

Proponents described three principal reforms in the bill: (1) create a large‑energy‑user rate class for facilities using more than 20 megawatts; (2) require new facilities to sign a long‑term contract (sponsors described 10 years in testimony) to ensure utilities can justify investments; and (3) assign to the new class the costs directly attributable to serving it, including transmission, distribution, energy and capacity. The bill text also ties eligibility to NAICS activity (witnesses cited NAICS 518210, data processing and hosting services) to capture data centers and similar loads.

Consumer advocates and utility analysts testified that data centers are an unusually large, inflexible load that can require utilities to build dedicated local transmission and supply before the customer connects. Bob Jenks, executive director of the Citizens Utility Board, said Portland General Electric has identified roughly $210 million in local transmission upgrades tied to data center growth in Washington County and warned that those costs are currently socialized across all customer classes. “We need a data center rate class because data centers are a unique set of customers that are putting a unique and significant cost on the electric system,” Jenks said.

Representatives of environmental and consumer groups supported the bill for consumer‑protection reasons and to limit stranded‑asset risk. Cole Sowder of the Green Energy Institute told lawmakers the bill would restore procedural certainty to the Public Utility Commission by giving it explicit authority to regulate the new class. Jeremy Fisher of the Sierra Club said tariffs that require minimum terms, demand charges or financial assurances are already being considered in other states and would protect incumbent ratepayers.

Industry witnesses including Ellen Zuckerman and Dylan Sullivan from Google said they welcome the conversation and want to work collaboratively with utilities and regulators. They described a multi‑state framework negotiated in other jurisdictions that pairs long‑term contracts, minimum infrastructure payments and collateral (letters of credit or parent guarantees) with commitments to use clean energy and to study grid‑enhancing options. Zuckerman said Google supports engagement to design long‑term, durable solutions and noted Google’s corporate goal of 24/7 carbon‑free electricity by 2030.

Lawmakers probed potential economic effects. Some members warned that if the state made developer costs too onerous it could deter investments and jobs; sponsors responded that the bill affects investor‑owned utility (IOU) territories and would not apply to consumer‑owned utilities where long‑term negotiated contracts are already common. Sponsors emphasized the bill is a tool to let the PUC assign costs where they are incurred; it does not automatically assign any particular dollar amount without a fact‑based PUC process.

Key technical details discussed in testimony and questioning included: the 20‑megawatt threshold that triggers the class; tying the class to NAICS activity that captures data processing/hosting; requiring minimum contract terms (testimony cited roughly a decade); and the use of collateral or minimum payments to protect utilities against customer departure. Witnesses described collateral forms such as letters of credit or parent‑company guarantees covering multiple years of minimum payments.

No committee vote occurred; the hearing produced broad agreement among consumer advocates, environmental groups and parts of industry that regulatory tools are needed, while some members asked staff and sponsors to continue outreach to data‑center companies and to consider how the approach should or should not apply to other potential large‑load industries.

The committee closed the public hearing and proceeded to additional agenda items.