Pend Oreille PUD has received questions about large industrial customers, including data centers, how they are served, and whether they affect the cost of electricity for homes and small businesses. The key takeaways are this:
- Large industrial customers, such as data centers, do not increase electric rates for residential or small‑business customers.
- They pay for their own electricity, the infrastructure needed to serve them, and are served under separate contracts.
- Pend Oreille PUD’s low‑cost, long‑term power resources are reserved for homes and local businesses.
We believe it's important for our customers to have clear, straightforward facts about how these customers are served and how their costs are handled.
Data Centers & Large Industrial Customers:
What is a data center?
A data center is a facility that houses large numbers of computer servers and other equipment used to store, process and manage digital information. Data centers support many of the online services people use every day, including cloud storage, online banking, streaming, email, online shopping, social media and artificial intelligence.
Because the servers and cooling systems operate around the clock, data centers can use significant amounts of electricity. That's why they are considered large industrial customers when their electric load meets the PUD's requirements.
Why do data centers use so much electricity?
Data centers can use significant amounts of electricity because they operate large numbers of computer servers and other equipment, often around the clock. Electricity is needed to power the computer equipment that stores and processes information. Additional electricity is needed for cooling systems that keep the equipment operating at appropriate temperatures, along with lighting, security systems and other supporting equipment.
The amount of electricity a data center uses depends on its size, the type of computing equipment it operates and how that equipment is used.
What is a large industrial customer?
At Pend Oreille PUD, large industrial customers are customers with electric loads greater than two average megawatts per hour. Industries that can have large electric loads include mining, manufacturing, pulp and paper, agriculture and forestry, as well as computational loads such as cryptocurrency mining and data centers.
Because of their size and unique power requirements, these customers are served under separate agreements.
Do large industrial customers use the PUD’s low‑cost power?
No. Pend Oreille PUD policy explicitly reserves low‑cost, long‑term power resources that it receives from Boundary Dam for homes and small businesses. Power for large industrial customers is purchased separately from the wholesale market.
How are large industrial customers served?
Large industrial customers are served under separate contracts that differ from those used for homes and local businesses:
• They are served by electricity purchased from the wholesale market, which is separate from the PUD's low-cost, long-term power resources from Boundary Dam.
• They provide guarantees or assurances for their power purchases (deposit, prepayment, letter of credit, or a combination).
• They may be required to prepay for their power purchases.
• They pay the full cost of the electricity they use.
Their electricity costs are not paid by residential or small‑business customers.
Do large industrial customers provide benefits?
Yes. In addition to paying for their own power and infrastructure, they:
• Pay annual delivery charges that increase with inflation.
• Have voluntarily reduced electricity use during periods of high demand, helping the PUD avoid costly market purchases and benefiting all customers.
Rates
Are residential customers paying for large industrial customers?
No. Residential and small‑business customers do not pay for the infrastructure required to serve large industrial loads. Any equipment or facilities needed to serve these customers are paid for by the customer requesting the service.
Large industrial customers also pay the full cost of the electricity they purchase and use.
Do large industrial customers cause rate increases?
No. No single customer, including an industrial customer, is responsible for residential rate increases. Residential and small-business electric rates are affected by costs facing the utility as a whole, including:
- Inflation
- Rising operating costs
- Future power supply costs
- Long-term infrastructure investments
- State and federal regulatory requirements
What do large industrial customers pay for?
Large industrial customers pay for the electricity they use, the infrastructure needed to serve their load, and annual delivery charges that increase with inflation.
Some large industrial customers have also voluntarily reduced their electricity use during periods of high demand (such as during periods of extreme cold or hot weather). This can reduce the PUD's need to make costly wholesale market purchases.
Infrastructure & Reliability
Who pays if a new substation or other major infrastructure is needed for a large industrial customer?
The customer requesting the new service pays for infrastructure needed specifically to serve its load. This can include substations, transmission facilities and other system upgrades. Those costs are not passed on to existing residential or small-business customers.
Does the PUD make sure its system can handle a new large industrial customer?
Yes. Every request for new or expanded electric service is reviewed by PUD engineering staff. The PUD evaluates whether the electric system can safely and reliably serve the additional load.
If upgrades are required to serve the new customer, the customer requesting the service is responsible for the associated costs.
Are large industrial customers served the same way as homes and small businesses?
No. Large industrial customers have different power requirements and are served under separate agreements that determine how their electricity is supplied, how costs are assigned and what financial responsibilities the customer has.
The PUD's Role
Does the PUD decide what types of businesses should locate in Pend Oreille County?
No. Whether a particular business locates in the county is a decision for property owners, businesses, residents and local governments.
The PUD's role is to provide electric service to eligible customers who meet its requirements and pay the costs associated with the service they request. Whether the customer is a data center, manufacturer, restaurant, coffee shop or family building a new home, the PUD applies its policies consistently.
Is a large-scale, power-needing company sustainable from the PUD's perspective?
The PUD's role is not to determine whether a customer's business model is sustainable or whether a particular industry is needed in Pend Oreille County. If an eligible customer requests electric service, the PUD evaluates whether its electric system can safely and reliably serve the requested load. The customer is responsible for the costs associated with providing that service.
The long-term success of any business depends on its own business model and operations, not on the PUD's ability to provide electric service.
What does the PUD consider when a large customer requests service?
The PUD's engineering team evaluates the requested electric load and determines whether the existing system can safely and reliably serve it.
If additional substations, transmission facilities or other infrastructure are needed, those costs are assigned to the customer requesting the service.
The PUD also considers the financial arrangements required to serve a large industrial customer, including how the customer's power purchases are secured.
What risks does the PUD consider when serving a large industrial customer?
The PUD's focus is on the risks associated with providing electric service, rather than evaluating the customer's business model. The utility plans for the customer's electric demand, reviews the effect of that demand on the electric system and requires the customer to pay the costs associated with serving its load.
Large industrial customers also provide financial assurances for their power purchases, such as prepayments, deposits or letters of credit, depending on the agreement.
Does the PUD consider whether a business benefits the local community?
The PUD welcomes businesses that contribute to the local economy, employment opportunities or tax base. However, determining whether a particular business or industry is beneficial or needed in Pend Oreille County is not the PUD's role.
The PUD's responsibility is to provide safe, reliable electric service to eligible customers while making sure the costs of serving those customers are appropriately assigned.
Does the PUD review every request for new electric service?
Yes. Every request for new or expanded electric service is reviewed to determine whether the PUD's system can safely and reliably serve the requested load. The review also identifies any infrastructure improvements that may be needed.
What This Means For You
Will a data center increase my electric bill?
No. Large industrial customers, including data centers, are served separately from homes and small businesses. They purchase and pay for their own electricity, pay for infrastructure required to serve them and do not receive the PUD's low-cost, long-term power resources reserved for homes and local businesses.
What actually affects my electric rate?
Residential and small-business rates are influenced by the overall cost of providing electric service. This includes power supply costs, operating expenses, infrastructure investments, inflation and regulatory requirements.
Why does the PUD provide this information?
PUD customers are the owners of their public utility. We believe customers should have clear information and the facts about how the electric system works, how costs are assigned and how different types of customers are served.
Bottom Line
Large industrial customers, including data centers, are served differently than homes and small businesses.
They:
- Pay for the electricity they use
- Pay for infrastructure needed specifically to serve them
- Purchase their power separately from the PUD's low-cost, long-term resources
- Provide financial assurances for their power purchases
- Operate under separate agreements designed for their unique energy needs
These costs are not assigned to residential or small-business customers.
Pend Oreille PUD remains committed to providing safe, reliable and affordable electric service while treating customers fairly and protecting the interests of all ratepayers.
Have another question?
Call 509-447-3137 or email information@popud.org. We're happy to help explain how our electric system and rates work.