Written by Leila Kearney
NEW YORK (Reuters) – Talen Energy Inc. has asked U.S. regulators to dismiss a challenge to its recent data center deal with Amazon.com Inc. that is being challenged by a group of electric utility companies that say the deal could raise consumers’ electricity bills, according to a filing on Friday.
Tallinn said the challenge posed by utility companies including American Electric Reports by Amazon Power (NASDAQ:) and Exelon (NASDAQ:) were inaccurate and that the Amazon data center interconnection agreement would not cause higher energy costs for utility customers or grid reliability issues.
“This is an illegal attempt to hijack a limited interconnection service agreement amendment procedure in which they have no interest and turn it into a temporary national referendum on the future of data center load,” Talen said in its filing with the Federal Energy Regulatory Commission (FERC).
Tech companies are racing to secure vast amounts of electricity to power and cool data centers, or the massive computer warehouses needed to launch technologies like generative artificial intelligence. Nuclear power, which produces virtually no carbon emissions and provides power around the clock, has become the data center industry’s first choice.
The FERC’s decision could set a precedent for deals like the one with Tallinn, where data centers are located on the site of the power plants that feed them, allowing the centers to be up and running quickly without getting stuck in interconnection queues that can take years to complete.
Tallinn announced in March that it had signed an agreement to sell electricity and a data center located at its Pennsylvania nuclear power plant to Amazon Web Services. The deal will provide Amazon’s computing warehouses with up to 960 megawatts of electricity, or enough to power about a million homes.
Last month, a group of electric utility companies, including American Electric Power and Exelon, asked the Federal Energy Regulatory Commission to hold a hearing to examine Tallinn’s interconnection agreement with Amazon more deeply or reject it outright. The group said the data center interconnection deal could result in $140 million in annual costs being shifted to ordinary taxpayers.
If the FERC allows the hearing, or rejects its plan, it would have a chilling effect on data center expansion and discourage new power plant construction at a time when U.S. electricity demand is growing at a rate not seen in decades, Talen says.
AEP and Exelon say that if the deal is allowed as is, it could burden ordinary taxpayers with energy infrastructure costs that don’t benefit them, or cause the grid to suddenly be drained of large loads of power when plants that serve as a direct source of power for data centers experience unexpected outages.
It is not yet clear when the Federal Energy Regulatory Commission might issue a decision on the issue.