The Risks of Cost Shifts in Serving Large Loads Under a Framework with Direct Allocation of Transmission Costs
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Data centers and other large loads are growing at an unprecedented pace, putting new pressure on the U.S. transmission system just as affordability concerns are front and center. Policymakers are exploring new ways to serve these customers quickly and efficiently, including proposals to directly assign transmission “network upgrade” costs to large load customers. While appealing in theory, this approach raises critical questions about who ultimately pays, and how costs are shared across the system.
This report shows that relying solely on direct assignment of network upgrade costs, when paired with exemptions from ongoing transmission charges, can drive substantial cost shifts onto other customers. Our analysis finds that, under realistic assumptions, these policies could shift $33–$47 billion in transmission costs in PJM alone, with meaningful bill impacts for everyday customers. The findings underscore why transmission pricing for large loads deserves careful scrutiny before new frameworks are adopted.
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All views expressed by the authors are solely the authors’ current views and do not reflect the views of Concentric Energy Advisors, Inc., its affiliates, subsidiaries, related companies, or clients. The authors’ views are based upon information the authors consider reliable at the time of publication. However, neither Concentric Energy Advisors, Inc., nor its affiliates, subsidiaries, and related companies warrant the information’s completeness or accuracy, and it should not be relied upon as such.