Across the Pacific Northwest, there is a growing conversation about the impact large loads have on the grid and rates that other utility customers pay. This is particularly true for loads like data centers. Like many utilities in our region, Kootenai Electric Cooperative (KEC) routinely receives inquiries from data center developers seeking to build these facilities in our area.
Because we are a member-owned cooperative, our first priority is always to you—our members. We want to be fully transparent about how KEC evaluates an energy request of this magnitude, what our legal obligations are, and the policies we have in place to protect you.
The Obligation to Serve
KEC has an obligation to serve consistent with our governing documents, including KEC’s bylaws and policies. This means we provide service to any customer (or member in our case)—whether they are building a single-family home or a large industrial facility. This is providing that such customers demonstrate and maintain full compliance with our established terms of service.
The unprecedented scale of modern industrial facilities and data centers requires multiple reviews and permits, including environmental permits (including air and water resources), and infrastructure planning across several different government agencies. The developers of these facilities must independently acquire permits and any other authorizations that they require from governmental jurisdictions that they operate under or within. We are just one piece of a much larger puzzle, and our responsibility is not something we take lightly.
New Large Single Loads
Due to the large volume of power these facilities consume, they are treated fundamentally differently than normal homes or businesses. Under our power supply contracts with the Bonneville Power Administration, any load that adds more than 9.9 average megawatts to our system over the course of 12 months must be classified as a "New Large Single Load" (NLSL). Currently, none of our members are considered an NLSL.
Before KEC will provide service to an NLSL, they must prove that the regional grid can support their load without degrading service for existing members. If grid improvements or new infrastructure are necessary, the NLSL member must independently pay for those upgrades upfront before any service begins.
If KEC receives a request for an NLSL, we follow an established process to evaluate the request. These are some of the considerations:
New Growth Will Not Be Subsidized
Per KEC policy, any NLSL is placed into its own separate rate class. All costs incurred by KEC to serve the load are directly allocated to them and recovered exclusively through a customized rate. Existing members are completely insulated from these costs.
Furthermore, KEC requires the NLSL member to provide robust financial security, such as a large deposit or letter of credit. This completely protects the cooperative (and you, the ratepayer) from the risk of default.
Member Benefits
Any large project must deliver a net benefit to our current members. In fact, when structured correctly, an NLSL can actually lower costs for existing members. Utilities have fixed operating costs. When an NLSL member purchases a large volume of energy, those fixed costs are spread across a much larger pool of energy sales. This can ultimately help lower the overall rates for other members.
NLSLs can also benefit the community by helping to lower property taxes. When large investments are made in an area, they can add value to the local tax base. This means the local government's budget can be spread out over a larger amount of property value, ultimately reducing the tax rate for the average homeowner. How this is accomplished is not something that KEC is involved with. It remains the prerogative of the regulatory jurisdictions such loads end up being constructed within.
The Bottom Line
While KEC and other Northwest utilities regularly receive load service requests from data centers, the reality is that most of these projects never come to fruition. Rest assured, if and when an NLSL successfully navigates this process, the bar to satisfy our financial, infrastructure, and reliability requirements—combined with the need to secure strict government operating permits—is exceptionally high and designed to safeguard our members.