Exciting news from Salem! Oregon regulators just finalized nation-leading protections that ensure data centers pay for their own power and infrastructure costs, stopping the burden from being shifted onto regular folks, while supporting the grid’s resilience, affordability, and clean energy transition. This has been a multi-year journey from bill to law to rules. Here’s a rundown of the what, why, and how we got here, as well as what’s next.

As data centers’ presence and energy demand grow exponentially in the Pacific Northwest, the path to achieving affordable, reliable, and clean electricity for everyone has become more challenging. Oregon is already ranked in the top five states nationally for data centers, including being home to Amazon’s second-largest data center hub in the world. As the AI race supercharges energy and water demand and the sheer scale of new data centers, Oregonians have seen skyrocketing electricity rates, rising carbon emissions, and a stressed grid. Old systems and regulations have to adapt quickly to keep up and better protect the people. For example, the state’s largest utility, Portland General Electric (PGE)’s rates went up nearly 60% since 2020. 

Building new transmission, capacity, and generation to serve a growing data center load is one reason utility rates have increased so rapidly, along with rising natural gas prices, wildfire mitigation, and the modernization of an aging grid. The existing rules for investor-owned utilities required these high costs of data centers’ energy and infrastructure to be largely borne by all utility customers. In regulatory parlance, costs were spread like peanut butter across all “rate classes,” including residential, commercial, and industrial. 

What is the POWER Act, really?

The Protecting Oregonians With Energy Responsibility (POWER) Act was passed by the state legislature (HB 3546) and signed into law in 2025. This ‘first in the nation’ state legislation makes data centers accountable for paying the energy and infrastructure costs incurred for their own operations. Now, when data centers’ demand for energy requires costly investments by their utility, Oregonians don’t have to foot the bill. There was broad, bipartisan support for the POWER Act, spearheaded by the brilliant ratepayer-advocate team at Citizens’ Utility Board (CUB).

The POWER Act that became law had three key components:

1. Create a stand-alone large-load-rate class for data centers and cryptocurrency operations. This prevents the cost shift to regular Oregonians because all costs associated with the power, capacity, and transmission serving data centers can be attributed to and paid for by them.
2. Require data center operators to bear the risks of major infrastructure build-out so that other ratepayers aren’t paying for future stranded assets:
   1. Execute contracts with utilities for a minimum of 10 years to ensure payment of costly grid investments over time
   2. Pay for utility investments for grid connection, even if operations ramp down or the data center shutters.
   3. Pay an ‘excess demand’ charge if the data center exceeds its energy allocation, so ratepayers aren’t on the hook for it.
3. Ensure new data center loads do not impede utilities’ clean energy targets nor the state’s greenhouse gas emissions goals.

A major implementation win

Once the bill became law, all eyes turned to the Public Utility Commission (PUC), which regulates our investor-owned utilities. The PUC has been developing rules for both PGE and PacifiCorp to implement the POWER Act. Now that the POWER Act rules for PGE have been finalized, there’s a lot to feel proud about. Climate Solutions and our partners, represented by the Green Energy Institute at Lewis and Clark Law School, in addition to CUB’s advocacy, helped secure very strong safeguards for ratepayers and clean energy in the final rules. Here are a few highlights of the new rules for data centers in PGE utility territory:

1. Established a large load rate class for data centers and cryptocurrency: Now, the costs associated with the power, capacity, and transmission serving data centers are attributed and paid for by them.
2. Minimum Contract Length and Demand Charges: Data center operators must execute minimum 10-year contracts and up to 30-year contracts for larger facilities. Additionally, data center operators must cover 90% of their electricity demand up front (whether or not it materializes).  This better protects ratepayers from the risk of being on the hook for future stranded assets. 
3. Exceedance Penalties and Exit Fees: If data centers use more energy than planned, they must pay 1.5x the energy costs and 4x the transmission costs. If data centers close, they are responsible for a portion of the remaining infrastructure and energy costs.
4. Clean Energy Safeguards: Data centers must queue and can interconnect to PGE’s system only once sufficient clean energy is available to meet their additional demand. That ensures these huge loads don't hamper our state's transition to clean energy. 
5. Boosting Energy Efficiency: Large data center operators (100 MW+) will pay a 1-cent-per-kWh surcharge to support energy efficiency, repairs, and distributed energy resources for Oregon's most energy-burdened households. 
6. Transparency: Data center operators must report their energy usage in annual reports.

What’s next?

These new data center protections will go into effect in June, and then we will see exactly how it impacts PGE’s electric rates. However, we do have some clear signals that by stopping the cost shift and having data centers pay for all of their own energy and infrastructure costs, other PGE customers will see their current electric rates actually go down! When PGE initially filed a proposal in UM 2733, the docket where these issues were considered, the company asked that ratepayer protections go into effect for 10 years. PGE estimated that data center rates would immediately increase by 20%, and residential customers could see a decrease of 2-3%. The PUC’s finalized rules make data centers pay those costs indefinitely, for the life of the asset as long as it’s being used by the data center (which could be many decades longer), so those cost savings will likely be even higher in June and going forward!

Climate Solutions is grateful for the Green Energy Institute’s skillful advocacy in this proceeding, and for the PUC Commissioners’ and staff's historic and strong rulemaking implementing the POWER Act. Building on this win, we now turn to securing similarly robust rules for PacifiCorp, which will then mean these new guardrails cover almost two-thirds of Oregon electric utility customers. We are also participating in the Governor’s Data Center Advisory Council, which is developing recommendations for broader guardrails for energy, water, and communities to ensure more sustainable development in Oregon going forward. Going from recommendations to bill to law will be a big focus in the 2027 legislative session!

Stay tuned for updates on all these next steps!