The Oregon Public Utility Commission questioned Portland General Electric’s proposals concerning grid infrastructure cost allocation for data centers, voicing concern that the utility risked prioritizing data centers over other customers.

The Oregon PUC held the hearing under docket UM 2377, which it created in March 2025 to investigate the impact that large loads have on other customers. But with Oregon legislators passing the POWER Act in 2025, UM 2377 has become a first step in rolling out the law.

The POWER Act aims to create a separate customer category for large energy users, such as data centers, and require those users to pay a proportionate share of their infrastructure and energy costs. The law defines a large energy use facility as one that uses more than 20 MW. It applies only to Oregon’s investor-owned utilities. (See Oregon House Passes Bill to Shift Energy Costs onto Data Centers.)

The Jan. 21 hearing focused on PGE’s written testimony submitted on Dec. 19.

PGE wrote that it aims to create a “durable, transparent and equitable rate structure that fairly allocates growth-related costs to the customers driving system growth, whether they are large loads such as data centers or residential demand from increasing use of air conditioning, so that each customer class pays for the costs it causes and the system benefits it receives.”

PUC Chair Letha Tawney asked for clarification on PGE’s proposal, including its proposal to continue to offer an opt-in approach for grid flexibility from data centers.

Tawney asked why the utility is sticking to its voluntary flexibility approach instead of implementing a mandatory requirement to tackle potential “scarcity events” that can impact the system and other customers.

“Your proposition is the opt-in is working: We shouldn’t worry about mandating something,” Tawney said. “I guess I’m really concerned about grid constraints driving pricing and reliability events, truly. So, why should I have confidence that the opt-in is sufficient, as opposed to mandating, from a reliability perspective, that this flexibility has to be on the table?”

In exchange for flexibility, PGE offers data center developers “speed to market,” which has resulted in “very aggressive flexibility proposals,” PGE’s Isaac Barrow replied.

Barrow contended that the opt-in approach has led to “significant resources [at] zero cost to the utility or any other participant, to provide the most benefit.”

“There is also a technical challenge, because it is very bespoke,” Barrow said. “I’m not sure what requirements you could bring forward that would allow that specific optimization of the flexibility proposals.”

Tawney also asked how PGE’s proposals could impact other customers’ compliance with Oregon House Bill 2021, which directs the state’s investor-owned utilities to reduce greenhouse gas emissions by 80% by 2030, on the path to achieving 100% GHG-free generation by 2040. (See Clean Energy, Equity Goals to Reshape Oregon IRP Process.)

PGE has proposed implementing a Peak Growth Modifier (PGM), a methodology to allocate fixed generation and transmission costs to customer classes based on their contribution to peak load growth.

“I am concerned that there is a limited universe of large-scale clean energy projects that are well priced and have reasonable commercial online dates, have interconnection agreements signed and some sort of line of sight to actually energizing,” Tawney said.

She asked how the PGM could address the potential of large loads consuming lower-cost generation resources while leaving residential customers with higher-cost options for HB 2021 compliance.

PGE has proposed new special contracts aimed at allowing large load customers to accelerate buildout of clean energy on the grid with the idea that it would “only be the resources that are left over from an RFP process, allowing for the best projects to go to our cost-of-service customers,” according to Jacquelyn Ferchland, senior manager of rates and regulatory affairs at PGE.

Barrow added that the special contracts would address effective load carrying capability and “what is the appropriate risk allocation for underproduction as well as overproduction of the specific contracted asset.”

He noted that if PGE does not serve data centers within the HB 2021 framework, other entities without decarbonization requirements may take over.

“With the demand we’re seeing, if … PGE does not serve these entities within our service portfolio, within the protections of House Bill 2021, there is a strong potential that they get served by an entity that does not have decarbonization as to the greenhouse gas requirements or is not subject to the Power Act or House Bill 2021,” Barrow said.

Financial Concerns

The hearing also touched on the financial pressure from buildout of resources to meet demand from data center customers.

Although tools like Contributions in Aid of Construction could alleviate some of the pressure, that might not be enough, Tawney said. She noted the risk of PGE running out of capital for other projects.

PGE keeps the balance sheet in mind, which is why the utility does not build at the speed data center customers would like, according to Ferchland. PGE’s flexibility approach and special contracts aim to allow data centers to connect to the utility’s system faster, she said.

“But otherwise, we are concerned about pressure on our balance sheet, and we would want to make sure that we move only as quickly as appropriate to ensure that our balance sheet remains healthy,” Ferchland said.

“I am concerned that you’re articulating a pacing based on your financial situation that I’m not seeing in the tariff,” Tawney said. “And I’m not understanding how you would be able to accomplish without sort of being accused of a discriminatory behavior towards a particular customer. So, understanding that would be really helpful.”

The commission’s final order is due by April 30, 2026, according to the docket.