Achieving Fairness and Efficiency
Amparo Nieto of Charles River Associates is an energy economist with thirty years of experience as an advisor and testifying expert in the field of innovative electricity rate designs, marginal cost of service studies, and state and federal regulatory policy reforms.
The American electricity industry is facing new planning, regulatory, and ratemaking challenges due to steep load growth from decarbonization and electrification goals, combined with the extraordinary expansion of hyperscale data centers.
Unlike the organic demand growth and occasional large commercial additions of the past, future system expansion will primarily be driven by exceptionally large, energy-intensive customers with significant near-term reliability impacts. Utilities with previously ample capacity margins may now find that a single data center warrants building new generation or transmission solely to serve it.
As a result, adding data centers to the grid is expected to substantially increase the incremental cost of serving load and raise revenue requirements across much of the country. At the regional level, new data center loads are already driving up capacity market prices as reserve margins tighten (in PJM’s 2025–26 capacity auction, data center demand nearly tripled the clearing price to about $9.3 billion). New data center loads may also strain the FERC-jurisdictional transmission grid.