Large Energy Users Want Power. Here’s How to Protect Other Ratepayers from the Costs.

This report by RMI examines how utilities and regulators in the United States are using large load tariffs to prevent the costs of serving new, high-demand electricity users—particularly data centers—from being shifted to other ratepayers. The analysis of 65 state-level tariffs identifies five common safeguard provisions: minimum contract terms, minimum monthly billing demands, collateral requirements, exit fees, and capacity reassignment.

• Utilities are establishing distinct rate classes for large energy users to increase transparency regarding the costs of serving them and the revenue they generate. Eligibility for these tariffs is most commonly defined by total capacity in megawatts, though some tariffs use load factor, power factor, or industry. In some states, thresholds are legislated; for example, Utah's SB132 defines large loads as those 100 MW or greater, while Minnesota's HF16 directs the Public Utilities Commission to set an appropriate threshold.
• To mitigate the risk of stranded assets, tariffs are increasingly implementing minimum contract terms and minimum monthly billing demands. Minimum contract terms range from 1 to 20 years, with Kentucky Power’s Tariff Industrial General Service requiring a 20-year term for new loads of 150 MW or more. Minimum monthly billing demands ensure customers pay for a set level of demand even if actual usage is lower, often calculated as 75–90 percent of contracted capacity, the customer's historical peak, or a fixed floor.
• Financial safeguards such as collateral requirements and exit fees are used to protect ratepayers from defaults or early contract terminations. Of the 65 tariffs reviewed, 37 included collateral requirements (such as cash deposits or letters of credit) and 31 included exit fees. For instance, Dominion Energy’s GS-5 Large General Service Tariff requires $1.5 million in collateral per megawatt of contracted capacity, while AEP Ohio’s Schedule Data Center Tariff allows termination after five years for a fee equal to 36 months of minimum charges, provided there is three years of notice.
• Capacity reassignment is a less common safeguard, appearing in 12 of the reviewed tariffs, which allows customers to transfer contracted capacity and financial obligations to another qualified user. This limits stranded assets by enabling new customers to utilize existing grid capacity. For example, Appalachian Power Company and Wheeling Power Company’s Schedules L.C.P. and I.P. permit the reassignment or reduction of up to 20 percent of contracted capacity without penalty under specific conditions.

APA

RMI (2025). Large Energy Users Want Power. Here’s How to Protect Other Ratepayers from the Costs. https://rmi.org/resources/large-energy-users-want-power-heres-how-to-protect-other-ratepayers-from-the-costs/

Chicago

RMI. Large Energy Users Want Power. Here’s How to Protect Other Ratepayers from the Costs. 2025. https://rmi.org/resources/large-energy-users-want-power-heres-how-to-protect-other-ratepayers-from-the-costs/.

Wikipedia

{{cite report |author=RMI |title=Large Energy Users Want Power. Here’s How to Protect Other Ratepayers from the Costs. |date=7 November 2025 |url=https://rmi.org/resources/large-energy-users-want-power-heres-how-to-protect-other-ratepayers-from-the-costs/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{rmi2025large, author = {{RMI}}, title = {{Large Energy Users Want Power. Here’s How to Protect Other Ratepayers from the Costs.}}, institution = {RMI}, year = {2025}, month = nov, url = {https://rmi.org/resources/large-energy-users-want-power-heres-how-to-protect-other-ratepayers-from-the-costs/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }