But a data center cannot live on electricity alone. Most require massive amounts of water to keep their furiously computing brains cool. And in this region, where part of the pitch is access to vast reserves of natural gas for power generation, gas utilities may also find themselves in the mix.
Some are already finding ways to chase the data center wave outside the jurisdiction of the Pennsylvania Public Utility Commission.
When Essential Utilities, the parent of Peoples Natural Gas and Aqua Pennsylvania, announced last month that it would invest $26 million in developing a hyperscale data center campus in Greene County, it wasn't speaking as a regulated utility.
None of its roles in the proposed project on the site of the former Robena coal mine will involve the PUC, a company spokesman said — not the $26 million it is fronting to order the natural gas turbines that will supply off-grid electricity to the data center; not the money it plans to spend building an 18-million-gallons-per-day water treatment plant for the campus, and not the "gas consulting services and energy management services" that Peoples will provide, on which the company could not elaborate, but which do not involve the procurement or delivery of natural gas to the site.
Dave Spigelmyer, vice president of government relations for IEP, a Pittsburgh-based outfit that is developing the project, said it will be a completely self-contained campus, with battery storage from EOS Energy. IEP secured a land agreement with the site's current owner, Core Natural Resources.
Dan Adamski, executive managing director with JLL, which is marketing the site to data centers, said there has been a shift in how data center project developers are approaching off-grid resources.
It started with a wider acceptance of natural gas, which Mr. Adamski noticed after the last presidential election.
"Some of the users we spoke with [before November] viewed natural gas as a bridge to the grid, [as in] 'Ok, we'll pinch our nose and go with gas until we get to the grid,' " Mr. Adamski said. "Now they've changed their posture."
Water and gas companies are clearly taking notice.
Essential, for example, has been telegraphing its intentions to clinch data center business to investors for months.
In an earnings call in May, Peoples CEO Mike Huwar said the company is looking at ways to supply gas to data centers both in front of the meter and behind the meter — i.e., through its regular distribution system that serves current customers and also through dedicated pipelines that would serve only that data center client. He suggested these efforts will benefit all utility customers.
In an August call with investors, Essential CEO Chris Franklin said the potential deals with data centers in the company's pipeline are "maybe not all rate based or all regulated, but some unregulated opportunities as well."
The main attribute is their speed, the "quick turnaround" required by data center developers, he said.
Risk and reward
In theory, connecting new customers to a utility network can help all the rate payers in that network, by spreading the costs of service among a greater denominator. And, in theory, if a utility has to upgrade or build out its system in order to connect that new customer, that expense also would be spread among all the rate payers, at least those in the same customer class as the newbie. Utilities have an obligation to serve whoever shows up in their territories.
PUC Chairman Stephen DeFrank recently argued that, if done right, "new data centers can be integrated into the electric grid in a manner that benefits all utility customers, local municipalities, and the Commonwealth."
"The decisions we make in the next five to seven years will impact us for the next 70 years," he said in testimony before the state's Senate Democratic Policy Committee last week.
The PUC is close to releasing a proposed model tariff for data centers (or any other large-load customer) that want to connect to their local electric utility grid. The tariff will address financial security requirements, minimum contract terms, early termination fees, how long the utility can take to study the impact of a new entrant, and other factors. Ten organizations testified at the PUC's April hearing and 40 more submitted written comments for the docket, Mr. DeFrank said.
Natural gas utilities weren't at the table, and weren't invited to it, according to Columbia Gas of Pennsylvania, which slipped the comment into a briefing in its latest rate case.
"There are significant differences in providing gas or electric service to data centers," the company noted.
The current rate case, which aims to raise residential bills by about 11%, also includes a proposed "economic development distribution service tariff" that would allow Columbia Gas to serve large loads like data centers outside of its regulated utility rates.
Columbia Gas CEO Mark Kempic said in an interview last month that this kind of structure already exists elsewhere.
"We, in our Virginia affiliate, have a commission-approved rate schedule that basically says the utility takes the risks and gets the rewards, but the residential customers and commercial/industrial customers will not be impacted."
Stakeholders including Pennsylvania's Consumer Advocate have opposed the idea, saying it's too early to even have the discussion since Columbia Gas doesn't have any data centers under contract.
"We have leads," Mr. Kempic said. And the point of having the discussion now is to have something ready to go when the data centers approach.
This approach would also deprive Columbia Gas' other customers of any potential benefits from having data centers on the system. And that's part of the reason the utility is trying to force the issue, Mr. Kempic said.
"We put this tariff out there for discussion and as a straw man," he said. "[To] see if there's a way that we could all agree to a certain amount of reward, certain amount of risk."
Carson Kearl, an energy transition analyst with Enverus Intelligence Research, who recently analyzed the potential of repowering shuttered and soon-to-be-retired coal plants with natural gas to serve data centers, said there's a "bit of a bifurcation" among utilities' approaches to data centers.
"Some of them are instituting policies like collateralization, take-or-pay requirements, minimum billing ... and others are not and they're doing more things to incentivize these loads like local tax breaks.
"Everyone's just trying to figure out, 'How do I avoid having the cost of this new load be distributed among my current consumers while still attracting that large load to come to my system," he said.
There's also the tricky matter of gauging which large projects are real — and not also shopping around in other utility territories — and are likely to be built.
Water pressure
For water utilities, serving data centers isn't just a matter of adding a new, water-ravenous customer to the team, but also managing increasing summer peaks.
"An average size water-cooled data center can use 16 million gallons of water in July, with a maximum day demand of up to 3 million gallons," Tony Nokovich, vice president of engineering for Pennsylvania American Water, said during a Pennsylvania Senate Majority Policy Committee hearing in August. "That same data center may only use 24,000 gallons of water in the month of January."
This may require utilities like PA American Water to build new facilities for those high use times, he said.
"Data centers should pay the costs associated with development and infrastructure upgrades necessary to serve them, so our other customers do not foot the bill for the investments they do not benefit from," he said.
Mr. Nokovich added that the challenge could be met, with proper planning.
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