With artificial intelligence and other technology driving massive increases in demand for electricity, Duke Energy Florida on Friday filed a proposal aimed at preparing for the possibility of data centers being built in the state.
The proposal, filed at the Florida Public Service Commission, came as the issue is also part of a broad Florida Power & Light rate case.
Duke said in its filing that Florida can plan for data centers’ increased electricity demand and learn from other areas of the country to “carefully balance attracting new business and economic development opportunities while adequately protecting existing retail customers.”
“DEF (Duke Energy Florida) must be proactive and prepared with the rates and contract structures in place when and if data centers seek to locate in Florida and in DEF’s territory,” the proposal said. “Creating a protective framework on the front-end sets DEF up for success and protects customers from day one.”
Data centers are one of the biggest issues in the utility industry nationally, as power companies look for ways to meet the demands of data centers that play a key role in such things as artificial intelligence and cloud computing. As an example, NextEra Energy, the parent company of Florida Power & Light, is working on plans to restart a nuclear-power plant in Iowa that could produce electricity for data centers.
Steven Wishart, an assistant vice president with the consulting firm Concentric Energy Advisors, Inc., said in testimony filed with the Duke proposal that utilities are increasingly competing for data-center projects, with the competition “particularly intense in regions like Northern Virginia, Iowa, Texas and Oregon, where utilities have aligned infrastructure investments, regulatory policies and tax incentives to create attractive conditions for data center development.”
“Florida, while not yet a top-tier data center market, has the potential to become more competitive if utilities can offer appropriately structured service terms and infrastructure support,” Wishart said in the testimony.
Duke does not have what are known as “large load” data centers in the areas it serves in Florida. But the proposal, which needs Public Service Commission approval, would take a series of steps to prepare for potential future data centers.
For example, it would create a new customer class for large load customers, establish a corresponding rate schedule and set what it described as a “uniform policy” for such customers.
Duke’s filing said such proposed changes “collectively aim to ensure that DEF can adequately serve these new loads and that large load customers pay for their fair share of the costs to serve them, all while providing protections for existing customers from the risk of stranded costs.” Generally, stranded costs could involve a utility being unable to recoup enough money from data centers, pushing costs off to other customers.
“DEF does not currently have any large load data center customers, but given the recent trends that have been identified, the company anticipates that it may be requested to provide service to these kinds of customers, and that such service, with nothing more, may impact all customers,” the proposal said. “In recognition of these facts, and to be proactive to these growth and demand trends, the company is proposing changes to its rate design” that would build on a change made last year in a rate settlement approved by the Public Service Commission.
Similar issues could be resolved this fall as the Public Service Commission decides an FPL base-rate case. A proposed rate settlement that FPL reached with businesses and several groups, for example, addresses what are known as “tariffs” – which detail rates and charges — for large load customers. The proposed rate settlement is being contested by the state Office of Public Counsel, which is designated in law to represent utility customers, and some consumer groups.
Testimony filed last week by Tiffany Cohen, an FPL vice president, said the utility developed proposed tariffs “to proactively address and be ready to serve large load customers that will have significant impacts on FPL’s transmission system and generation resource plan, and to ensure that the general body of customers is protected from incremental costs incurred to serve such large load customers.”
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