Across the country, the growth of artificial intelligence (AI) is contributing to a rapid increase in data center development. This trend raises questions about the financial and environmental costs involved and who bears those costs. City Light is responding with a proposed policy approach to ensure that large data center loads are managed in a way that protects existing customers and the grid we all share.
Our Grid Is Under Pressure
Because data center demand could grow exponentially without policy constraints, it introduces uncertainty into our load forecast and adds pressure on grid infrastructure.
Electricity demand in the Seattle area has been relatively flat for years. However, we expect it to rise as more residents and businesses shift to electric vehicles and transition from fossil-fuel-based heating and cooling to electric alternatives.
Meeting growing demand will require real investment in clean energy resources, transmission, and grid upgrades. This raises broader questions about local resource impacts, including effects on electricity demand, water use, and how those costs should be distributed.
Serving large new loads can require expensive wholesale power purchases and major infrastructure investments. To ensure new or expanding large data centers bear their own energy and infrastructure costs, rather than shifting them to other customers, we are proactively updating our rate policies.
Our existing customers, residents and local businesses, have funded this system over decades. They should not be required to absorb costs associated with new large business customers, particularly when those businesses could relocate and leave others to pay for costly investments made to serve them.
How the Proposed Large Data Center Policy Would Work
Under our proposed New Large Data Center Load Policy, new large data centers would no longer be eligible for general service rates. Instead, they would be served under a new rate class.
What the policy proposal includes:
- New rate class: Applies to data centers requesting new or expanded electric service of 10 megavolt-amperes (MVA) or more, roughly equivalent to powering about 2,000 homes.
- Cost-based rates: Rates reflect the incremental cost of procuring and delivering the power those customers require.
- Customer cost responsibility: Customers sign a service agreement accepting full financial responsibility for the infrastructure and related costs for the life of the contract.
- Service queue: New large load customers enter a queue and receive service once the necessary power supply and infrastructure are in place.
- Demand response: Customers would be required to invest in conservation and demand response measures, including curtailment during peak demand periods.
Public Response and City Council Action
When news of potential large data center projects in Seattle surfaced, the reaction was swift. Mayor Wilson and the Seattle City Council received thousands of emails from residents, the vast majority opposing new data centers. That response prompted action. The City Council has passed a one-year moratorium preventing the siting of data centers in Seattle that use more than 20 MVA.
During this period, the Council will study the impacts of large data centers on City infrastructure, utilities, land use, public health, and the local economy. A companion resolution calls on the Mayor’s Office to coordinate with City departments on the policies, legislation, budget actions, and other steps needed to guide future data center activity in Seattle.
What’s Next
Our New Large Data Center Load Policy is part of our proposed rate ordinance, scheduled for review by the City Council’s Parks and City Light Committee on June 17. The policy will be effective upon adoption of the ordinance. While the Council’s ban applies to large data centers within Seattle city limits, our policy would apply to our entire service area, which includes parts of Burien, Tukwila, SeaTac, Shoreline, Lake Forest Park, Renton, Normandy Park, and unincorporated King County.
Preparing for the Future
Reliable, sustainable, and affordable electricity is essential to protecting our planet and advancing the technologies and industries that support our region’s economy and future. The landscape we operate in will continue to shift, bringing new challenges. Our responsibility is to anticipate those challenges, identify opportunities, and act. The New Large Data Center Load Policy is a first step in managing our finite resources on behalf of the community we serve.