Future data centers are increasing energy demand forecasts. The state wants proof it will be built.

The predictions are startling, with utilities saying they will need two to three times as much electricity within a few years to power the massive new data centers powering the burgeoning AI economy.

But the challenge (some say impossible) of building new power plants to meet that demand so quickly is alarming lawmakers, policymakers and regulators who are questioning whether these utility forecasts can be trusted.

One burning question is whether this prediction is based on data center projects that may never be built. This has raised concerns that regular ratepayers could be stuck with a bill that would cost billions of dollars and build unnecessary power plants and grid infrastructure.

The intense scrutiny comes as analysts warn of the risk of an artificial intelligence investment bubble that could inflate the prices of tech stocks and burst.

Meanwhile, consumer advocates have noted that ratepayers in some areas are already shouldering the cost of powering data centers, such as the Mid-Atlantic Grid, which covers all or parts of 13 states from New Jersey to Illinois and Washington, D.C.

“There’s speculation there,” said Joe Bowling, head of Monitoring Analytics, an independent market watchdog for the mid-Atlantic grid region. “No one really knows. No one looks at the forecasts carefully enough to know what’s speculative, what’s double counting, what’s true and what’s not.”

Suspicion about sudden increase in demand

Utilities and utility companies say there is no standard practice across the system or among utilities for vetting such large projects, making finding a solution a hot topic.

Uncertainty about forecasts is typically caused by several sources.

One, industry and regulators say, concerns developers who want to connect to the grid but don’t have solid plans or don’t have the customers, money or other leverage to complete the project.

The other found data center developers filing grid connection requests in various separate utility regions, PJM Interconnection, which operates the mid-Atlantic power grid, and the Texas Legislature.

For competitive reasons, PJM said developers often do not tell utility companies whether or where they have submitted other power requests. That means a single project can inflate the energy forecasts of multiple utilities.

Efforts to improve forecasting gained attention in September when members of the Federal Energy Regulatory Commission asked the nation’s power grid operators for information on how they determine whether a project is not only viable, but uses the power it requires.

“Better data, better decisions, better and faster decisions mean we’re going to be able to build all of these projects and all of this infrastructure,” Commissioner David Rosner said in an interview.

The Edison Electric Association, a trade group for commercial power companies, said it welcomes efforts to improve demand forecasting.

real, speculative, or “in between”

The Data Center Coalition, which represents technology giants like Google and Meta, as well as data center developers, is calling on regulators to require more information about forecasts from utilities and develop a set of best practices for determining the commercial viability of data center projects.

Aaron Tinjam, the coalition’s vice president for energy, said improving forecast accuracy and transparency is a “fundamental first step to truly meeting this moment” in energy growth.

“Everywhere you go, the question is, ‘Is (energy) growth real? How can we be sure?'” Tingjam said. “And we see validation of commercial readiness as one of the key, low-hanging opportunities to embrace right now.”

Yigal Feibush, CEO of data center developer Pennsylvania Data Center Partners, said utilities are conducting a “fire drill” as they try to scrutinize the large number of data center projects seeking power.

He says most projects will fail because many project backers are new to the concept and don’t know what it takes to build a data center.

States are also trying to do more to understand what is included in utility forecasts and eliminate speculative or duplicative projects.

In Texas, which is attracting large data center projects and still reeling from power outages from 2021’s deadly winter storm, lawmakers were shocked to be told by grid operator Electric Reliability Council of Texas in 2024 that peak demand could nearly double by 2030.

They found that state utility regulators lacked the tools to determine whether that was practical.

Texas Sen. Phil King said in a hearing earlier this year that transmission operators, utility regulators and power companies don’t know whether demand for electricity is “real, just speculation, or somewhere in between.”

Lawmakers passed a bill sponsored by Mr. King, which is now law, to require data center developers to disclose whether there is a need for electricity elsewhere in Texas and to set standards for developers to show that they are heavily financing their sites.

Electricity bills are also rising

PPL Electric Utilities, which serves 1.5 million customers in central and eastern Pennsylvania, predicts data center peak power demand will more than triple by 2030.

PPL Corp. President and CEO Vincent Sorgi told analysts on an earnings call this month that the data center project is “real and moving fast and furious” and that “there is no near-term risk of excess generation.”

PPL said the data center projects included in the forecast are often backed by contracts with financial commitments reaching tens of millions of dollars.

Still, PPL’s ​​forecast prompted state Rep. Danilo Burgos to introduce a bill that would give state utility regulators more power to inspect how utilities compose energy demand forecasts.

Ratepayers in the Philadelphia area of ​​Burgos have just absorbed a rise in electricity prices, with utility company PECO blaming higher wholesale power costs on the Mid-Atlantic Grid driven primarily by data center demand.

That’s why ratepayers need more protection to ensure they benefit from higher costs, Burgos said.

“Once you make money, no matter what company you are, you don’t see any empathy for ratepayers,” Burgos said.

© 2025 Associated Press. Unauthorized reproduction is prohibited. This material may not be published, broadcast, rewritten or redistributed without permission.