CHICAGO — As large data centers burn electricity as fast as some small cities, utilities and advocates are looking for ways to ensure they’re not passing the buck for related infrastructure costs to everyday ratepayers.

The Illinois Commerce Commission on Thursday approved a proposal from Commonwealth Edison that allows the electric utility to seek a type of security deposit from developers of large-load projects based on the energy needs of proposed projects. Those deposits will allow ComEd to recover costs associated with data centers if the companies go out of business, move, or if facilities constructed to serve the customer are under-utilized.

The ICC called the approval of ComEd’s June request an “important first step.” But consumer and environmental advocates sought broader protections that the commission ultimately determined were out of scope for the proceedings.

The ICC did, however, direct its staff to initiate new proceedings next month to investigate the unaddressed issues and adopt new ratepayer protections, recognizing what it called “significant reliability, affordability and policy risks” caused by large-load projects in ComEd’s territory.

The order stated that ComEd’s pipeline includes more than 75 large-load projects that are expected to draw over 28,000 megawatts of energy. That’s more than ComEd’s highest-ever 24,000-megawatt peak demand in its 118-year history.

“In other words, the cumulative maximum demand of requests to serve new large load projects that are already in the application process is nearly 1.2 times greater than the highest demand ComEd has ever needed to serve,” the commission wrote in its order.

The huge surge in demand by data centers, which ComEd said has accelerated at an “exponential pace” since 2019, comes at a time when the state is facing projected energy shortfalls that are expected to drive up energy costs if not resolved.

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“ComEd’s proposals are pivotal customer protection measures,” the company’s attorney told the commission during oral arguments. “They mitigate the risk that costs associated with providing service to new large load customers might be shifted to other customers.”

Prior to the order, ComEd required a flat $1 million deposit from all large load project applications. Under the revised tariff, security deposits for new projects requesting 50-200 megawatts will start at $1 million and increase by $500,000 for each additional 100 megawatts beyond that point.

In projects that come to fruition, the deposits will go toward the development cost of the project, according to ComEd. Deposits will be returned on canceled projects, minus costs already incurred by ComEd.

Here’s what’s at stake

Concerned environmental and consumer advocates had hoped the ICC would set additional consumer protections, like requiring data centers to pay for the full cost of their infrastructure needs and adoption of a “bring your own new clean energy” model.

ComEd’s proposal protects customers in part by ensuring that data centers pay the portion of the cost assigned to them, Brad Klein, managing attorney with the Environmental Law and Policy Center, told Capitol News Illinois.

“But what it doesn’t do is fully, directly assign all of the costs of the infrastructure to the data center in the first place,” Klein said. “We still spread it out, we socialize it, and then ComEd is only protecting the portion of the cost that is assigned to the data center, even though the data center is causing all of that cost.”

The cost of infrastructure like transmission wires and poles for a single data center could be $50 million or more, just to serve a single new data center, Klein added.

According to a report by the Union of Concerned Scientists, ComEd ratepayers are already left holding the bag for hundreds of millions of dollars in costs to connect data centers to the grid.

The new tariff structure would not apply to data centers already on the grid.

Advocates also say the “bring your own new clean energy model” could offset reliability risks created by energy generation shortages exacerbated by the data center demands.

They recommended that companies that bring their own renewable energy sources to the table should be rewarded with faster grid connections, skipping the long wait times that normally exist for data centers to connect to ComEd’s grid, using TSA PreCheck as an analogy.

“Travelers who demonstrate they are low-risk earn access to faster screening and better service. Illinois can apply the same principle to data centers,” Klein wrote on ELPC’s website. “Projects that put in the work up front — planning for clean energy, efficiency, and grid reliability — should be rewarded with faster grid connections.

The approach has been discussed in Texas and by PJM, the regional network operator that serves all or part of 13 states reaching from the East Coast to the ComEd territory in Illinois. Advocates are also pushing for parallel legislative protections via the POWER Act, introduced by Illinois state lawmakers in February.

The bill language is slated for discussion in upcoming subject matter hearings in the House. In the Senate, it has been sent to a subcommittee, where senators will discuss multiple bills regulating data centers.

The ICC directed its staff to file a report and draft an order initiating additional proceedings by April 23 to evaluate further ratepayer protections. That exploration should be completed within eight months or “as expeditiously as possible.”

“We’re taking the commission at its word that this is a first step and that they’re serious about the follow-up steps needed to protect consumers and the environment,” Klein said. “We’re really heartened by the Commission doing this on a real, near term, urgent basis.”

Capitol News Illinois is a nonprofit, nonpartisan news service that distributes state government coverage to hundreds of news outlets statewide. It is funded primarily by the Illinois Press Foundation and the Robert R. McCormick Foundation.