Competing Senate bills try to answer the question, how should Utah power new data centers?

Yahoo

13-02-2025

Transmission lines lead away from the coal-fired Intermountain Power Plant near Delta, Utah on Monday, Feb. 3, 2025. (Photo by Spenser Heaps for Utah News Dispatch)
After a couple of years focusing on keeping coal burning to power the state, Republican lawmakers are expanding their focus to cover hyperscale demands, potentially from data and artificial intelligence centers.
Two bills establishing requirements to process large-scale electricity service requests are currently being considered in the Senate. One, by Senate Majority Leader Kirk Cullimore, R-Sandy, hasn't left the rules committee, and the other by Sen. Scott Sandall, R-Tremonton, who has successfully sponsored substantial energy legislation, has already advanced to the Senate floor.
Because there's currently not a specific process to single out large energy users, to serve potential large customers in data centers or other manufacturers, Rocky Mountain Power, the largest electricity provider in the state, must include those loads in its general rate calculations filed to the Utah Public Service Commission. That's what both of those bills are trying to change.
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'What my bill file does is allow Rocky Mountain Power to step out of that regulated monopoly space and into the competitive space and contract directly with these large loads,' Sandall told reporters on Wednesday.
Under SB132, sponsored by Sandall, Rocky Mountain Power may individually contract with new customers requiring over 50 megawatts of power without affecting demands and rates for existing customers. The utility would have six months to review those novel contracts.
'If at that point in time no deal can be made, or it looks like they are struggling to make a deal, a third-party producer could come in then with the large load under a separate contract,' Sandall said in his presentation to the Senate Natural Resources, Agriculture and Environment Committee last week.
One aspect of Sandall's bill has raised concerns for those who would like to see more renewable energy sources in the state's portfolio — the fact that intermittent energy sources, such as solar and wind, need to be 100% backed up with energy storage to serve large-load contracts.
Energy demand from data centers growing faster than West can supply, experts say
'What we don't want to have is billions of dollars of investment under these contracts and an energy source that's not being able to supply the whole base load, then coming to the legislature and saying, 'excuse us now, we've got to have more power,'' Sandall said. 'And where do we leverage that?'
SB227, Cullimore's bill, is similar to Sandall's. But, the biggest difference is that Cullimore's proposal doesn't dictate which resources should be included in the contracts with data centers.
It's an approach that advocates for renewables prefer, Josh Craft, director of government relations and public affairs for the nonprofit group Utah Clean Energy, said in a statement.
'It is resource neutral and provides a pathway to utilize Utah's incredible clean energy potential,' Craft wrote. 'Utah should be expanding access to affordable, clean energy, not creating barriers that limit options for businesses and communities.'
Sandall called that resource neutrality the 'movement of unrestricted energy through the meter,' which is what gives Rocky Mountain Power — and him — some pause. But, while both senators have different approaches, there's a lot that Sandall said he and Cullimore are trying to work out together.
After working on his bill for six months, Sandall said he thinks he's getting close to creating a firewall between current customers' rate structure and data centers. Rocky Mountain Power representatives have told him that his bill would allow them to find the power to serve those new, large loads, he told Utah News Dispatch.
'Rocky Mountain Power, quite honestly, has some apprehension around this bill, because they're not used to stepping in a competitive space,' Sandall said. 'And so I've had to bring them along, and they've finally gotten here.'
Because data and AI centers are still speculative customers, Michele Beck, director of the Utah Office of Consumer Services, believes it is reasonable to expand views on what models could work for Utah.
'Under the utility model, it's impossible to understand how we can build enough resources fast enough to serve what might be out there, what people are saying is out there,' Beck said about the potential for new data centers in the state. 'So I think it's good to evaluate alternatives, but on the other hand, it needs to be done in a way that protects existing customers.'
Sandall's bill does a reasonable job of protecting other customers, she said.
His intent, Sandall said, is to be cautious since these contracts are a new space for the state.
'We're having a really hard time making sure that we don't go to deregulation, but we still allow this faster build-out of the energy that we're going to need,' he said.
Senate President Stuart Adams, R-Layton, supported the idea of making plans to 'keep a firewall between them and our public utility' since, he said, data centers are willing to pay more for energy, potentially affecting rates for other Utahns.
As for which of the bills Senate leadership will end up supporting for final approval? Adams said he expects the process to dictate the answer.
'There's two bills, and they'll work together, and it'll be interesting how they come out.'
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