Utilities and PSC warn draft Microgrid Act could shift costs, raise reliability questions

Senate Energy Task Force members heard robust pushback on a draft Microgrid Act on March 26, 2026, as utility and regulator witnesses warned the bill’s structure could shift reliability risks and transmission upgrade costs onto all customers.

The task force’s discussion featured testimony from Larry Hand, Entergy Louisiana’s representative, who said the draft contains ‘‘a lot of ambiguity’’ and that provisions effectively requiring utilities to supply ‘‘supplemental or standby service’’ risk moving ‘‘significant reliability or cost risks … from the microgrid to the broader grid and all electric customers in Louisiana.’’ Hand told the panel that when a generator can inject power or draw standby service, subsequent interconnection or transmission studies can reveal upgrades that are allocated across all load under FERC’s open‑access rules.

Catherine Bowman, executive counsel for the Louisiana Public Service Commission, told the task force the PSC’s staff has had only ‘‘preliminary discussions’’ with SWEPCO related to a separate multicampus data‑center announcement and that no parent contract is yet before the commission. Bowman also said the PSC has moved to speed certain certification processes — citing an eight‑month example for a past large certification and a ‘‘lightning’’ directive to streamline staff review — but warned the draft Microgrid Act could create regulatory confusion if it splits components of electric generation oversight between LED and the PSC.

Mark Clehammer of Cleco Power echoed the reliability and jurisdictional concerns. He said the LPSC’s certification process ‘‘reviews … reliability, resource adequacy and affordability’’ and that the microgrid bill’s LEHI certification ‘‘does not encapsulate the infrastructure and the processes that the LPSC has.’’ Clehammer added that the draft appears to create a ‘‘one‑way street’’ under which a microgrid district could seek backup or standby service without obligations that would ensure costs are allocated appropriately.

Industry and consumer representatives offered contrasting priorities. An Industrial Energy Consumer representative argued hyperscale data‑center customers often prefer power‑purchase agreements (PPAs) rather than leases to avoid owning fossil‑fuel generators; they said PPAs and larger district sizes (for example, the 12‑by‑12‑mile area discussed) could be important economic development tools if microgrids are required to pay full cost‑of‑service rates when they use distribution or transmission infrastructure.

A presenter with developer and project‑finance experience described how special‑purpose vehicles, residual value guarantees and other financing structures are used to partition investor risk in large data‑center projects, noting lenders and credit structures rather than just regulation influence project durability.

Rural electric cooperative testimony emphasized local impacts: a co‑op representative warned standby and backup services are typically inefficient, can require additional generation capacity that risks becoming stranded, and that the draft lacks protections for rural landowners and clarity about which loads qualify as district participants.

Task force members pressed witnesses on several numeric and timing issues in the draft: district size (comments cited both 10,000 acres and proposals up to 100,000 acres), contract terms (the Meta precedent included a 15‑year contract in discussion), negotiating windows (90 to 120 days were discussed), and the roughly 6,700 megawatts of existing industrial cogeneration that stakeholders said came through prior LPSC processes.

The task force did not take formal votes; the chair closed the meeting by thanking witnesses and adjourning by unanimous consent. The PSC and utilities told members they would continue to review and refine comments and that any formal filings related to Amazon or specific microgrid applications would trigger docketed PSC review.