Talen Energy asked that a challenge to its most recent data center agreement with Amazon be rejected by US authorities.
According to a filing on Friday, Talen Energy (TLNE.PK) has requested that U.S. authorities reject a challenge to its recent data center arrangement with Amazon (AMZN.O). The utilities are against the agreement because they believe it would result in higher power bills for the general public. Talen stated that the challenge, which was presented by utilities such as Exelon (EXC.O.) and American Electric Power (AEP.O.), opened a new tab, was erroneous, and that its interconnection agreement for the Amazon data center site would not result in problems with grid reliability or spikes in power costs for utility customers.
Talen filed a filing with the Federal Energy Regulatory Commission (FERC) claiming, “It is an unlawful attempt to hijack this limited interconnection service agreement amendment proceeding that they have no stake in and turn it into an ad hoc national referendum on the future of data center load.” In order to power and cool the data centers, or enormous computer warehouses, required to implement technologies like generative AI, technology companies are competing to obtain large volumes of electricity supply. Nuclear energy has emerged as a preferred choice for the data center business since it is essentially carbon-free and offers continuous electricity.
The ruling by FERC may establish a standard for agreements like the one with Talen, in which data centers are situated near the power plants that supply them. This arrangement enables the centers to start up fast and avoid waiting years in interconnection queues. In March, Talen declared that it had reached a deal with Amazon Web Services to sell electricity and a data center campus situated at its nuclear power facility in Pennsylvania. Through the agreement, Amazon would have access to up to 960 megawatts of electricity, or enough power to power almost a million households, for its computer warehouses.
Several electric companies, such as Exelon and American Electric Power, requested last month that FERC schedule a hearing in order to either fully examine Talen’s interconnection arrangement with Amazon or reject it. According to the group, the data center’s interconnection arrangement may cause regular ratepayers to bear a $140 million annual cost shift. In a time of unprecedented growth in the demand for electricity in the United States, Talen claims that if FERC permits the hearing or rejects its proposal, it will have a chilling effect on the expansion of data centers and discourage the construction of new power plants.
If the deal is approved as is, according to AEP and Exelon, ordinary ratepayers may be forced to foot the bill for unnecessary power infrastructure, or the grid may be suddenly depleted of large amounts of electricity in the event that the plants that supply the data centers directly experience unplanned outages. When the FERC would rule, the matter remained uncertain.
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