PORTLAND, Ore. (KATU) — The Citizens Utility Board (CUB) has accused Portland General Electric (PGE) of circumventing Oregon’s new POWER Act, which mandates that data centers cover their own energy costs.
CUB claimed PGE’s proposed cost-sharing framework unfairly burdens residential customers with a significant portion of the expenses associated with data center growth.
The consumer advocacy group was established in 1984, as a utility watchdog over Oregon’s three investor-owned electric utilities, PGE, Pacific Power and Idaho Power.
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According to CUB, PGE’s plan would charge residential customers 34-45% of the costs for new power supply and transmission, despite data centers being the primary drivers of increased energy demand.
CUB argued that this approach contradicts the intent of the POWER Act, which aims to prevent Oregon families from subsidizing data centers.
PGE, however, defended its proposal. The company mentioned a new tool called the Peak Growth Modifier as a means 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,” PGE said. “The principle is simple: customer groups driving peak-demand growth should pay for the infrastructure needed to serve that growth.”
The Oregon Public Utility Commission is currently reviewing PGE’s plan, with a decision expected by April 2026.
The POWER Act, signed by Gov. Kotek, instructed the commission to create a new industrial customer class for those using over 20 megawatts of energy, primarily data centers.
The bill also included provisions for infrastructure cost-sharing mechanisms, customer protections, and long-term contracts for data centers.
PGE’s proposal
PGE said the Peak Growth Modifier is intended to give regulators a more precise way to track who is actually driving new infrastructure needs as electricity demand rises, particularly during peak usage periods.
Rather than assigning new grid costs immediately across all customers, PGE claims the modifier looks backward to measure where recent growth has occurred and uses 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,” PGE spokesperson Drew Hanson said.
Hanson emphasized that the mechanism is not a one-time calculation, but a rolling reassessment designed to adjust as demand evolves, especially if forecasted data center growth materializes.
“It’s a rolling three-year period,” Hanson said. “What we’re thinking we will see there, if the forecasts are true, is that we will see substantial growth in data centers. And that way, then we can reassign and adjust those costs based on the growth of that specific class.”
PGE stated the Peak Growth Modifier is primarily aimed at shared infrastructure, such as transmission lines or grid upgrades that serve multiple customer classes, rather than equipment built for a single customer.
“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 said.
Under PGE’s current proposal, Hanson said that the new rate class would see a significant rate increase, while other customers could see reductions, depending on how regulators ultimately allocate costs.
“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.
PGE will submit a revised proposal to the Oregon Public Utilities Commission on Friday. Hanson did not provide any information about what those revisions will entail.
Watchdog concerns
CUB said PGE’s proposal does not reflect what lawmakers intended when they passed the POWER Act and would continue shifting significant infrastructure costs onto residential customers.
Executive Director of the Oregon Citizens Utility Board Bob Jenks argued 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 They cost $174 million. 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,” Jenks said.
Jenks also 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,” Jenks said. “They’ve lowered our peak usage; they’ve lowered overall electric usage by a huge amount.”
Another central concern is the time limit on cost-responsibility under the Peak Growth Modifier.
Now is not the time to ask residential customers to subsidize economic development of data centers.
Jenks said assigning costs for only three years ignores the long life of grid investments.
“These substations, three years after they were built, still don’t serve residential customers. 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 said.
Jenks warned 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.”
CUB is urging regulators to require clearer, longer-term cost responsibility for data centers before approving any final framework under the POWER Act.
The OPUC will make a final decision on PGE’s proposal in April.
What’s the buzz around data centers?
Data centers are facilities that house and run large computer systems. They have been expanding at a fast pace to power the fast-growing AI economy across the country.
They usually contain several computer servers, data storage devices, network equipment and other devices that allow for storing, managing, processing and transmitting data.
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Currently, residential customers account for 40% of total electricity consumption, while data centers represent only 6% in Oregon.
However, data centers are expected to grow to approximately 20% of total consumption by 2030.
Oregon currently has 138 data centers, according to Data Center Map’s database.
Data centers use a lot of electricity, especially those specifically built to support generative AI.
A new Pew Research Center analysis of federal and international data shows U.S. data centers used 183 terawatt-hours of electricity in 2024, about 4% of all electricity used nationwide, according to the International Energy Agency (IEA).
That’s roughly equal to the entire annual electricity use of Pakistan.
According to Pew and the IEA, a typical AI-optimized hyperscale center uses as much electricity as 100,000 homes a year. Newer mega-facilities could use 20 times more once they go online.
In major hubs, especially Northern Virginia, clusters of these centers now consume more than a quarter of the state’s total electricity supply, the Electric Power Research Institute reports.
Carnegie Mellon University estimates U.S. electricity bills could rise 8% by 2030 just from data centers and crypto mining alone, with even steeper hikes in the most data-center-dense regions.
Data centers in the U.S. also consumed 17 billion gallons of fresh, drinking water in 2023, mainly to cool energy-intensive AI chips.
By 2028, hyperscale centers alone could be consuming 16 to 33 billion gallons annually — roughly the yearly use of a mid-sized U.S. city.
