President Tom Falcone Quoted in Bond Buyer Article: "Data Center Financing Assumptions Under Scrutiny"

As data centers continue to expand their footprint across the U.S., rating agencies, issuers, and other stakeholders are actively engaged with municipalities and public power utilities on the impact large load growth is having on load forecasting, system expansion, and the supporting financial models for public utilities and investors. In a recent article by Jennifer Shea of the Bond Buyer, entitled "Data Center Financing Assumptions Under Scrutiny," LPPC President Tom Falcone explains how utilities across the country are adopting long-term financial contracts, customer-protection mechanisms, rate classes, and tariffs designed to filter speculative loads from interconnection queues, to ensure the hyperscalers driving significant load growth are financially committed to the infrastructure necessary to power them. As public power utilities and municipalities, our purpose is to provide reliable energy at the least cost to the customers and communities we serve.

The contracts with hyperscalers involve rate classes, and "we're going to charge you the appropriate price for that rate class as we go through rate processes," he said. "And if you come to town and you request 400 megawatts, you're on the hook to pay for maybe 80% of those (costs), whether you use it or not," said Tom Falcone

Several LPPC members are on the front lines of managing large load growth. In a recent survey, LPPC members reported having ~50GW of committed, speculative, or early stage load in their interconnection queues. They currently power ~18% of the nation's AI & Data Centers, and project to represent more than a third of all AI/Data Center interconnections in the next five years. As they move forward in negotiations with  AI/data centers, industrial, and advance manufacturing customers, our members are employing a variety of customer-protective mechanisms, including dedicated substations, upfront infrastructure funding requirements, take-or-pay provisions, minimum billing demand charges, exit fees, and bring-your-own-power arrangements, to ensure large load growth does not burden existing ratepayers.

Both approved tariffs and contract-based structures are in active use across multiple states, demonstrating that states and utilities have developed effective frameworks before any federal mandate.