Co-ops Seek to Shield Members From Data Center Costs

Data centers could help lower rural cooperative members’ electricity costs if developers pay for their own infrastructure and secure their own power supplies, Fort Belknap Electric Cooperative General Counsel Don Richards said.

Speaking with the Enterprise following the electric cooperative’s Oct. 10 annual meeting, Mr. Richards said attorneys working with rural cooperatives are structuring arrangements intended to prevent existing members from bearing the expense of serving large data centers.

“We don’t intend to let data centers, the expenses of serving them, be put on the other membership,” he said. “We’re making them pay their costs up front.”

That includes new power lines, substations, and transformers needed to serve the facilities, he said.

“If we have to build a new substation or power lines, we make them pay 100 percent up front,” Mr. Richards said.

Developers would also be required to obtain their own electricity supply rather than rely on the cooperative to furnish the additional power, he said. That could mean arranging a generation source or building their own generation.

“We don’t have the power to provide to them,” Mr. Richards said.

The cooperative would deliver that electricity through its lines and charge a fee for using the system. Earnings from that service could benefit the entire membership, he said.

“That fee then goes to help lower the cost for everybody else,” Mr. Richards said.

He cautioned that benefits would take time because data centers can take three or four years to become operational.

Mr. Richards said Fort Belknap did not have a major data center project pending in its service area, although he expected one eventually. He was working with other cooperatives already receiving inquiries.

The approach he described is intended to protect members from project-specific costs while allowing them to share in revenue from serving a new customer. He did not provide an estimate of potential bill reductions.

Mr. Richards said cooperatives must serve customers that locate within their service areas, but that obligation should not require existing members to subsidize a data center’s infrastructure.