Oregon Utility to Review Pge Plan Over Data Center Cost Concerns

PGE’s Cost-Sharing Proposal Sparks Controversy Over Data Center Costs

The Oregon Public Utility Commission is grappling with a significant challenge as it reviews Portland General Electric (PGE)’s proposed cost-sharing framework for data centers. The Citizens Utility Board (CUB), a long-standing watchdog group, has accused PGE of circumventing the state’s new POWER Act, which mandates that data centers cover their own energy costs.

Charging Residential Customers Unfairly

According to CUB, PGE’s plan would charge residential customers 34-45% of the costs for new power supply and transmission. This is despite data centers being identified as the primary drivers of increased energy demand. CUB argues that this approach contradicts the intent of the POWER Act, which aims to prevent Oregon families from subsidizing data centers.

Peak Growth Modifier Explained

PGE defended its proposal by mentioning a new tool called the Peak Growth Modifier. This mechanism is designed to ensure that those driving peak demand growth bear the associated costs. “The electric grid and generating resources are built to make sure customers are reliably served at moments when usage is at its highest point – this is peak demand,” said PGE spokesperson Drew Hanson.

Hanson emphasized that the modifier looks backward over a three-year period, measuring where recent growth has occurred and using that data to guide future cost allocation. “What essentially it does is that it looks at the past three years. It looks at growth across the entire system, and then it will assign, based on where that driver growth is happening, fair cost allocation for new infrastructure,” Hanson explained.

Utility’s Perspective

PGE stated that the Peak Growth Modifier is primarily aimed at shared infrastructure, such as transmission lines or grid upgrades that serve multiple customer classes. “If a data center is using a substation and no other customers are using that, they are paying for that substation,” Hanson said. “This is really for shared infrastructure, connected infrastructure that is serving the entire grid.”

The utility also pointed to the POWER Act’s creation of a data-center-specific rate class as a key change that allows costs to be more directly assigned than in the past. “What the POWER Act did is it created this new class of customers, so it gives us a new tool as the utility to prescribe costs to a specific sector,” Hanson added.

Regulatory Review and Timeline

The Oregon Public Utility Commission will make a final decision on PGE’s proposal in April 2026. Under current regulations, regulators are required to create an industrial customer class for those using over 20 megawatts of energy, primarily data centers. The bill also includes provisions for infrastructure cost-sharing mechanisms, customer protections, and long-term contracts for data centers.

PGE will submit a revised proposal to the Oregon Public Utilities Commission on Friday. “In these proposals that PGE is putting forward, we are actually saying that Schedule 96 is going to see a substantial rate increase upwards of 25%, and then other classes will see a decrease in their monthly rates,” Hanson said.

Watchdog Concerns

CUB warned that PGE’s proposal does not reflect what lawmakers intended when they passed the POWER Act. Executive Director Bob Jenks argued that PGE is resisting direct-cost assignment even when infrastructure is built exclusively to serve data centers. “PGE built a couple of substations out in Washington County to serve data centers, and they cost $174 million,” Jenks said. “Not a single residential customer, not one, is served by those two substations, but PGE’s methodology would assign 47% of the cost of those substations to residential customers.”

Furthermore, Jenks disputed PGE’s claim that residential customers are contributing significantly to peak-demand growth, pointing instead to long-term efficiency investments. “Residential customers are the primary funder of all the energy efficiency programs that PGE runs,” he said. “They’ve lowered our peak usage; they’ve lowered overall electric usage by a huge amount.”

Another concern is the time limit on cost-responsibility under the Peak Growth Modifier, which is set at three years. “These substations, three years after they were built, still don’t serve residential customers,” Jenks said. “And there’s still no basis to say, okay, now they’re three years old, we’re going to have every customer class across the system pay for them.”

Jenks warned that the proposal could worsen affordability issues for households already struggling with rising electricity bills. “Residential customers of PGE have seen the rates go up 50% over the last few years,” Jenks said. “Now is not the time to ask residential customers to subsidize economic development of data centers.”

Implications and Future Developments

The debate over how to fairly allocate costs for data centers has significant implications for Oregon’s energy landscape. With data centers expected to grow from representing 6% of total electricity consumption in 2025 to approximately 20% by 2030, the issue is not just about immediate rate increases but also long-term planning and infrastructure investment.

The decision by the Public Utility Commission will set a precedent for how future data center expansion costs are managed. As the industry continues to grow, stakeholders across Oregon will be watching closely to see how these regulatory changes play out.