What happens when the biggest customer on the grid can walk away?
Data centers now account for 94% of projected peak load growth in PJM, the nation’s largest grid operator, and utilities across the country are facing interconnection queues that have tripled in two years. How to meet this demand — and who bears the cost when things go wrong — has produced an entirely new category of utility regulation.
That exposure falls entirely on utilities and the customers they serve. For the last 20 years, data centers were served under general industrial tariffs: the same rates, terms, and protections available to factories and steel mills. That model assumed customers were anchored to their physical infrastructure and unlikely to leave. A data center’s value is in its compute capacity, not the building. An operator can shift workloads across facilities, scale down a site, or simply not renew service, all of which leaves the utility holding infrastructure investments sized for a load that no longer exists.
Beginning in 2018 and accelerating dramatically through 2024–2025, twenty-five utilities across 19 states have now filed data-center-specific tariffs, with 18 of them filed in the last two years alone. These rate structures introduced mechanisms that have never applied to any customer class: multi-year demand ratchets, decade-long contract commitments, collateral requirements of up to $1.5 million per MW, and, in some cases, explicit clean energy mandates.
Source: Latitude Intelligence
This report analyzes what those tariffs reveal across three dimensions (affordability, flexibility, and clean energy) and finds that regulators have made significant progress on the first while largely ignoring the other two.
On affordability, the shift has been decisive. The average DC ratchet (79%) exceeds any comparable industrial rate protection on record, and layered cost-protection mechanisms involving long terms and substantial collateral have replaced the one-year, metered-only frameworks that left ratepayers exposed.
On flexibility, the tariffs locked in cost protection without building any mechanism for grid coordination — even though research shows targeted curtailment during just 15 peak days per year could free 6–17% of total system capacity.
On clean energy, 40% of tariffs say nothing at all, and a February 2026 analysis identified 56 GW of behind-the-meter data center generation under development, roughly 75% of it natural gas. Tariff silence is not neutral. It exists alongside an industry that will build whatever gets power online fastest.
The era of serving data centers under general industrial tariffs is ending. The 25 tariffs examined here represent the utility industry’s first systematic attempt to build a commercial framework for this customer class. They were designed as defensive instruments to protect ratepayers from risk. The question now is whether they evolve into strategic instruments that capture the full potential of the data center–grid relationship.
TABLE OF CONTENTS
- Introduction: A New Category of Utility Regulation
- The Old Model: How Data Centers Procured Power
- The New Model: The Landscape of DC-Specific Tariffs
- Affordability: The Overcorrection
- Flexibility: The Untapped Opportunity
- Clean Energy: Transition or Afterthought?
- What to Watch in 2026
DOWNLOAD
The full report is free to download. It includes complete tariff analysis, rate design comparisons, and the regulatory landscape across 19 states.