Talen asks US regulators to reject challenge to Amazon data center deal

FILE PHOTO: Attendees walk through an expo hall at AWS re:Invent 2023, a conference hosted by Amazon Web Services (AWS), in Las Vegas

By Laila Kearney

NEW YORK (Reuters) -Talen Energy has asked U.S. regulators to reject a challenge to its recent Amazon data center deal, which is being opposed by a group of electric utilities that say the agreement could raise power bills for the public, according to a filing on Friday.

Talen said the challenge, brought by utilities including American Electric Power and Exelon, was inaccurate and that its interconnection agreement for the Amazon data center site would not cause spiking power costs for utility customers or grid reliability problems.

"It is an unlawful attempt to hijack this limited interconnection service agreement amendment proceeding that they have no stake in and turn it into an ad hoc national referendum on the future of data center load," Talen said in its filing with the Federal Energy Regulatory Commission (FERC).

Technology companies are in a race to access massive amounts of electricity supplies to power and cool the data centers, or giant computer warehouses, needed to roll out technologies like generative AI. Nuclear energy, which is virtually carbon free and provides around-the-clock power, has become a top pick for the data center industry.

FERC's decision could set a precedent for deals like the one with Talen, where data centers are located on the site of the power plants that feed them, allowing the centers to power up quickly without toiling in interconnection queues that can take years to clear.

Talen announced in March it had entered into an agreement to sell electricity and a data center campus located at its Pennsylvania nuclear power plant to Amazon Web Services. The deal would provide Amazon's computer warehouses with an electric capacity of up to 960 megawatts, or enough to power about a million homes.

A handful of electric utilities, including American Electric Power and Exelon, last month asked FERC to hold a hearing to more deeply scrutinize Talen's interconnection agreement with Amazon or deny it outright. The group said the interconnection agreement for the data center could result in a $140 million per year cost shift to everyday ratepayers.

Talen says if FERC allows the hearing, or rejects its plan, it would have a chilling effect on data center expansion and deter new power plants from getting built in a time of U.S. electricity demand growth not seen in decades.

AEP and Exelon say if the deal is allowed, as is, it could saddle everyday ratepayers with the costs of power infrastructure that does not benefit them, or suddenly sap the grid of large loads of power when the plants that act as a direct energy source to the data centers have unexpected interruptions.

It was unclear when FERC might issue a decision on the case.

(Reporting by Laila Kearney; Editing by Josie Kao and Chris Reese)