This was first printed in The Equation, a weblog by Union of Involved Scientists, as a part of a collection, A Extra Resilient Grid for the Southeast.

Late final yr, Louisiana utility regulators quietly authorized a brand new strategy for dealing with electrical energy infrastructure proposals for powering giant clients—a change that might pressure ratepayers within the state to pay greater than half of the prices of powering a given AI knowledge heart.

The Louisiana Public Service Fee’s (LPSC) new strategy—launched by Commissioner Coussan, and supported by all different commissioners besides Commissioner Lewis—creates a quick observe for utility firms searching for to construct energy crops and different infrastructure in response to a big, energy-intensive buyer’s request to hook up with the grid. Any such giant buyer is, by far, most probably to be an AI knowledge heart lately.

Substantively, this struggle is about blocking the utterly avoidable danger of energy-bill spikes for Louisianans, merely to cater to the rushed planning of electrical energy infrastructure to energy knowledge facilities—vitality guzzling behemoths, which might put city-sized calls for on the ability grid. 

There was successfully no means to offer enter on the coverage with out bodily confirmed as much as the vote, which a complete of three individuals did. Right here’s a glance into how this initiative, dubbed the “Lightning Modification,” turned an official, unwritten Louisiana utility coverage, with primarily zero public enter.

The method, or lack thereof:

Other than the transcript and minutes of the month-to-month assembly the place the vote befell, this new coverage is not going to be written down wherever in its ultimate type (for instance, via a written order). 

Transcripts and minutes appear to remain on the LPSC’s web site for simply two years—however it’s straightforward to think about a future by which there aren’t any traces or paper trails for this large hand-out to tech and utility firms, at shoppers’ expense. (So, for the sake of future transparency, we’ve gone forward and archived the minutes and transcript.)

Let’s speak concerning the title. The “Modification” a part of “Lightning Modification” is nominally a change to the Fee’s current “request for proposals” (RFP) rule, in that it waives these necessities (extra on this additional down). Nonetheless, even the title is a farce, as this doesn’t truly seem like an actual “modification” as a result of the rule in query is not going to truly be modified within the official, everlasting report. The docket the place this rule lives reveals no such exercise.

I’ve spent extra time than I’d like monitoring regulatory dockets throughout the nation, so belief me once I say this: that is by no means how regulators usually enact new insurance policies, that are usually traceable and everlasting in order that anybody can discover the requirements that apply. Within the absence of full transparency from the LPSC, right here’s our effort so as to add some permanence and readability to this new regulatory strategy.

The substance: who qualifies for this fast-track evaluate?

So, what standards would a utility firm—say, one searching for to serve a brand new AI knowledge heart—have to satisfy as a way to undergo this fast-track regulatory evaluate course of— say, for a brand new gasoline energy plant?

Properly, the 2 important substantive necessities are first, that the utility should have an electrical energy provide settlement with the info heart with a minimal 15-year time period, and second, that the info heart should decide to overlaying not less than half of the price of that new energy plant.

Sure, simply half.

That begs the query: who would pay the opposite half? In all chance, different Louisiana ratepayers, who might not profit in any respect from the info heart. 

And the kicker? It may find yourself being much more than half of the fee funded by on a regular basis Louisianans’ utility payments—extra on that under. Understand that these knowledge facilities are being constructed throughout the nation by the likes of Meta Platforms, Fb’s mother or father firm, and Microsoft, that are a few of the wealthiest firms on the earth and are fully able to paying for 100% of their very own energy wants.

Ratepayers may fund as a lot as 75% of capital prices

Electrical energy infrastructure usually lasts for many years and is paid for by ratepayers till it absolutely “depreciates.” A depreciation schedule is sort of a mortgage schedule for paying off the mortgage taken out for purchasing a home (there are distinctions between the 2, however for the needs of this piece, we’ll hold it easy).

These phrases arrange the primary lure for ratepayers. A proposed data-center-serving gasoline energy plant, for instance, doesn’t absolutely depreciate over 15 years. Sometimes this depreciation takes place over a for much longer interval, round 30 years or extra. (Notice: a 30-year “depreciable life” would align with Entergy Louisiana’s three gasoline crops authorized final yr for Meta Platforms’ knowledge heart in Richland Parish.)

In that situation, we’d have a state of affairs the place a utility firm may undergo this new fast-track course of whereas solely securing 25% of the income wanted to pay for the capital prices of the gasoline plant: half of the prices for half the depreciable life. As a result of there isn’t any requirement within the Lightning Modification for a utility firm’s shareholders to share within the prices, ratepayers could be on the hook for the remaining 75%.

In that state of affairs, the LPSC may maintain these actors accountable, and shield ratepayers, by  “disallowing” prices from being handed to ratepayers additional down the road if the utility acted “imprudently.” A discovering of such imprudence would require the utility’s shareholders pay up, as a substitute of ratepayers. Nonetheless, absent any blatant and visual mismanagement, the Fee is unlikely to conclude the utility acted imprudently after they’ve strongly signaled with this new coverage that they’re okay with ratepayers subsidizing Massive Tech’s knowledge heart improvement.

And although the language within the minutes is imprecise, this association seems to be is only for the capitalprices, which means the bodily infrastructure being constructed. The requirement to cowl half of the related prices does not appear to incorporate operational prices, reminiscent of gasoline purchases, which Entergy’s clients are additionally slated to subsidize after the approval of its gasoline plant venture for the Meta knowledge heart.

The facility prices can also be inflated

Right here comes the second lure for ratepayers: eschewing probably the most primary cost-savings measures. In an effort to hurry via these electrical energy venture critiques, the Lightning Modification waives the Fee’s necessities for utilities to problem a request for proposals (RFP) so long as the utility’s venture meets the factors mentioned above.

In idea, the RFP rule requires utility firms to check the market and solicit bids from third-party energy suppliers, reminiscent of renewables and storage builders, to make sure that electrical energy demand is being met on the lowest attainable value. By waiving this rule, utilities would not have to satisfy the demand of the massive buyer like a knowledge heart on the lowest value. As a substitute, they’re more likely to search to construct their personal producing capability, as a result of it’s typically extra worthwhile to take action. 

That is what occurred within the Entergy/Meta case final yr: Entergy bought a waiver from the RFP rule and elected to construct its personal gasoline crops and transmission infrastructure. The utility firm now stands to make an estimated $178 million in new annual shareholder earnings.

With this new coverage, the LSPC isn’t solely setting the stage for half of the prices of powering knowledge facilities to be handed to different clients, but in addition making it fairly probably that these general prices will likely be needlessly inflated by disposing of probably the most primary RFP value financial savings necessities. It’s laborious to check an even bigger present to Louisiana utility shareholders, on the expense of vitality affordability for hundreds of thousands of individuals.

Planning total cities’ price of demand in eight months

From there, the remaining obstacles are small. There are another miscellaneous necessities, like a letter from the Louisiana Financial Improvement Secretary “confirming the shopper’s curiosity and the significance of energy availability” inside 5 years of an preliminary utility. As soon as these standards are met, the Fee is aiming to get the utility’s venture authorized in simply eight months.

In Richland Parish, the Meta knowledge heart’s peak load is deliberate to be twice that of your entire metropolis of New Orleans, and future knowledge facilities may additionally doubtlessly devour total cities’ price of demand. Entergy’s gasoline plant venture for the Meta knowledge heart was already rushed, initially deliberate for a 12-month regulatory evaluate course of, till it was all of a sudden shortened to simply 10 months. 

Almost half a yr after the LPSC’s August 2025 approval, Entergy nonetheless hasn’t adequately demonstrated that it may possibly energy Meta’s large knowledge heart whereas maintaining the grid dependable for different clients.

The try and shoehorn this advanced regulatory evaluate course of—which entails hearings, stakeholder testimony, settlement negotiations, and so forth—right into a interval of simply eight months units the state up for a wide selection of heightened dangers, specifically energy outages. 

Throughout the nation, the fast progress in knowledge facilities is maintaining grid-reliability authorities up at night time, and Louisianans already expertise much more energy outages than common. Each transmission grid operators for the state needed to implement rolling blackouts final yr in two separate occasions. And although the state’s important transmission grid simply managed to remain dependable in the course of the latest Winter Storm Fern, distribution grid disruptions knocked out energy for greater than 100,000 clients, a number of of whom tragically misplaced their lives as a result of outage.

The LPSC evaluate course of must be aimed toward figuring out whether or not a given venture proposal is within the public curiosity—one thing that’s going to be a lot more durable to perform with a straight face when the “lightning” strategy dangers much more energy outages. By disposing of necessities for assessing cheaper and cleaner useful resource choices, the “Lightning Modification” can be more likely to lead to increased prices for ratepayers and extra dangerous air pollution.

Determining a greater means ahead

In the identical assembly the place Commissioner Coussan’s Lightning Modification was handed, Commissioner Lewis launched a really totally different sort of proposal on the identical subject. Commissioner Lewis needed to open a rulemaking docket on dealing with proposed additions of enormous masses, reminiscent of knowledge facilities, which might permit a wide selection of stakeholders to offer enter on how the LPSC ought to deal with this new problem of knowledge heart progress. Nonetheless, the vote was deferred in December, and deferred once more on the Fee assembly in January.

This proposal is far more affordable than the Lightning Modification, and may result in a framework the place ratepayers are protected against the prices and dangersof Massive Tech’s knowledge heart improvement. In the event you reside in Louisiana—exterior of New Orleans, for the reason that New Orleans Metropolis Council regulates utility charges there—you possibly can name or e mail your Public Service Commissioner and urge them to implement knowledge heart coverage that places the pursuits of Louisiana communities above these of Massive Tech and utility firms.

Paul Arbaje is an vitality analyst for the Union of Involved Scientists. He writes concerning the affect of U.S. fossil-fuel coverage and strategies for rushing the transition to clear vitality.