INDIANAPOLIS — As more tech giants work out plans to build data centers in the Hoosier State, electric utility Indiana Michigan Power – or I&M – reached a historic settlement with Microsoft, Google and Amazon Web Services this week.
“It’s a very, very promising first step,” Kerwin Olson with the Citizens Action Coalition said.
According to Olson, the settlement shields everyday Hoosiers from seeing their electricity bills skyrocket due to data center infrastructure costs.
”Data centers use an extraordinary amount of energy,” Olson said. “So, this settlement is an attempt to sort of create a framework that will protect other customers from the needs of these data centers.”
“What this really does is establishes a process for bringing in the large-load customers but letting them know that there are certain criteria that they will need to meet in order to work with us,” Stephanny Smith, Director of Communications at I&M, said.
A stipulation of the agreement ensures the tech giants pay the Indiana Community Action Association a combined $1.5 million each year for five years to support low-income customers.
“Hopefully, we can keep that going at the end of that five years,” Olson said.
The settlement will only apply to I&M customers pending approval from the Indiana Utility Regulatory Commission (which a spokesperson said should be finalized early next year).
”We really do hope that this sets forth some type of blueprint for other companies,” Smith said.
”We are hopeful that, you know, this settlement, considering it was unanimous will provide sort of a guide not only with respect to any legislation…but also how the other utilities will approach these data centers, their significant needs, and protecting their customers from extreme rate shock,” Olson said.
This comes as some state lawmakers want to ensure all large-scale data centers bear the brunt of utility costs they create moving forward.
“If they can afford to build a data center, they can afford to assume part of the risk, so, that’s already going on; we’re just planning to put it in statute,” State Rep. Ed Soliday, the Indiana House Utilities Chairman, said during an interview last month.
Olson said he expects there will be some mix of legislative and regulatory changes next session as to how hyperscaler data center utility/infrastructure costs are handled.
”What we’re hearing from the Statehouse and other decision makers is a real desire to ensure that electric bills don’t skyrocket because of these data centers,” Olson said. “Yes, they want to have an inviting environment to bring these investments in Indiana, but they have significant concerns regarding electric bills.”
