Florida Is Deciding Who Pays for Data Center Power. Every Other State Is Watching.
Florida's Public Service Commission heard five hours of testimony on August 25 on the first utility compliance proposal filed under Senate Bill 484, the state law requiring that large electricity users bear their own full cost of service. One commissioner has already written that the petition appears facially noncompliant. This is the first statutory cost-allocation requirement in the country tested against an actual utility filing, and whatever Florida approves becomes the reference other commissions borrow.
By Keith Reynolds | Publisher & Editor, ChargedUp!
The Statute Sets a Standard the Filing Must Meet
Senate Bill 484 requires public utilities to reasonably ensure that each large load customer bears its own full cost of service and that the cost is not shifted to the general body of ratepayers. The statute enumerates what that cost includes: connection, operations and maintenance, incremental transmission, incremental generation, and any other costs required to serve the customer. The law also preserves local government authority over comprehensive planning and land development regulation for large load customers, and specifies that they may not be treated as electric substations for siting purposes.
Duke Energy Florida, the first investor-owned utility to file, does not want to set a rate specific to large load customers yet, arguing its tariff provisions alone protect other ratepayers. Its counsel described protections including a 20-year minimum term, financial assurances, early termination obligations, monthly minimum bills and two years notice before termination, and said the proposal satisfies the legislature's directive. Commissioner Mike La Rosa wrote that the petition appears facially noncompliant with the statute's mandatory requirements.
Public counsel Walt Trierweiler argued the filing does not attempt to comply with the statute's basic provisions, and that no settlement agreement exempts a utility from statutory requirements. He also framed the underlying exposure directly: the risk of devastating economic loss in subsidization is substantial should any one of these data centers fail to materialize, or fail to be used throughout its life. He said he hopes the case produces a template for what compliance actually looks like.
The Federal Track Has the Same Unresolved Question
The question is not confined to Florida. Five state ratepayer advocates, from Delaware, Illinois, Maryland, Ohio and Pennsylvania, told the Federal Energy Regulatory Commission that its framework for connecting data centers in PJM Interconnection fails to address how network upgrade costs caused by large loads are allocated. They asked the commission to clarify that cost recovery agreements are just and reasonable only when the large load customer pays the full cost of the upgrades its load requires, and noted that states have limited ability to sub-allocate transmission costs because some PJM zones cross state lines.
Two proceedings, one issue. Until it is settled in either forum, network upgrade costs driven by large loads continue entering transmission owner revenue requirements, where they are recovered from the full customer base rather than the customer causing them.
What It Costs If the Allocation Fails
The counterfactual is already visible in the rate record. As of August 2026, 57 electric and gas utilities across 48 states had rate increase requests pending, averaging 13.2 percent, and separate analysis identified at least 254 utilities with increases implemented, approved or proposed beginning in 2025 through 2027, reaching roughly 68 percent of United States electricity customers.
Those requests land on a base that has already moved. Retail electric rates rose 2.6 percent from 2024 to 2025 after inflation adjustment, and since 2019 nominal commercial rates are up 26 percent. Utility rate increase requests reached $18 billion in 2025, the highest in decades, and regulators approved 64 percent of the dollar value of requests between 2021 and 2025. That approval rate is the forward indicator: absent a change in standard, most of what is pending will be granted in some measure.
Rate cases run six to 18 months, which places most of what is pending now into 2027 operating statements. At an 8 percent capitalization rate, every $1,000 of durable annual electricity cost added to a building removes roughly $12,500 of asset value. A misallocation decided in a docket this year is a permanent adjustment to property value, not a temporary expense variance.
The Emerging Template
Several structural features are appearing across jurisdictions and are worth recognizing when they show up in your service territory. Minimum contract terms, frequently 14 to 20 years, ensure the customer remains through the depreciation period of the assets built to serve it. Minimum bill provisions require payment on contracted capacity whether or not it is used, which addresses the take-or-pay risk that concerned Florida's public counsel. Financial assurances, in the form of collateral or letters of credit, protect against abandonment. Early termination obligations and multi-year notice requirements prevent an orderly-looking exit that leaves stranded infrastructure.
The disputed element in Florida is not whether those provisions exist, since Duke proposed them. It is whether contractual protections alone satisfy a statute that also requires a rate ensuring full cost recovery. That distinction, between a contract that allocates risk and a rate that allocates cost, is the precise question other commissions will inherit.
What to Do
1. Determine whether your state has enacted a large load cost allocation statute and whether any utility has filed a compliance proposal. Those dockets set the terms under which future data center load enters or stays out of your rate base.
2. Treat the load forecast and cost allocation method as the contestable elements in any pending rate case in your territory. They receive substantially less scrutiny than the return on equity and have comparable effect on your bill.
3. Consider intervention or coalition participation through a building owners association where the exposure justifies it. Commercial customers are frequently unrepresented in proceedings dominated by utility and residential advocates.
4. Model a 10 to 15 percent electricity cost increase against your holds, and calculate the resulting valuation effect at your cap rate. That number determines how much attention this deserves and what an onsite generation project is actually worth as a hedge.
5. Check your leases for how utility increases pass through. Full-service gross leases place the increase on the owner. Expense stops set years ago may no longer cover current rates.
The Bottom Line
A regulatory proceeding in Tallahassee will do more to determine commercial electricity costs over the next decade than most of the technology coverage the sector generates. The statute says large users must pay their own way. The filing tests whether that means a contract or a rate. Owners who track these dockets in their own territory will see the increase coming and can hedge against it. Owners who do not will find it in their operating statement and call it a surprise.
Sources
https://www.utilitydive.com/news/duke-energy-florida-psc-large-load-rate/828951/
https://www.thecentersquare.com/florida/article_92016bfb-8e37-4ecb-bdc7-0b49079db4a3.html
https://www.utilitydive.com/news/ferc-data-center-pjm-transmission-costs/825760/
https://www.americanprogress.org/article/electric-and-natural-gas-utility-rate-hikes-tracker/
Frequently Asked Questions
What does Florida Senate Bill 484 require?
Public utilities must reasonably ensure that each large load customer bears its own full cost of service and that the cost is not shifted to other ratepayers, including connection, operations and maintenance, incremental transmission, incremental generation and any other costs required to serve the customer. The law also preserves local government land use authority over large load customers.
What is the dispute in the Duke Energy Florida filing?
Duke argues its tariff provisions, including a 20-year minimum term, financial assurances, minimum bills and termination notice, satisfy the statute without setting a large-load-specific rate. Public counsel and at least one commissioner contend the statute requires more than contractual protections.
How does this reach a commercial building's operating statement?
Costs not allocated to the large load customer enter the utility's revenue requirement and are recovered from the general customer base. As of August 2026, 57 utilities across 48 states had rate increases pending averaging 13.2 percent.
What is the valuation effect?
At an 8 percent capitalization rate, every $1,000 of durable annual electricity cost added to a building removes roughly $12,500 of asset value. Because rate base recovery runs 30 to 40 years, the adjustment is effectively permanent.
Can a commercial owner participate in these proceedings?
Yes. Rate cases and tariff proceedings accept intervention, and building owners associations frequently participate on behalf of commercial customers, who are otherwise underrepresented relative to utility and residential interests.
