SMECO Proposes New Rules To Keep Data Center Costs Off Customers’ Electric Bills
SMECO and other Maryland utilities have proposed new rate rules for data centers and other large electricity users to the Maryland Public Service Commission. These rules aim to ensure that residential customers do not bear the financial risks of grid infrastructure built for energy-intensive developments. The proposal is currently under regulatory review, addressing concerns about large-load customers covering their connection costs.
SMECO, the Southern Maryland Electric Cooperative, has submitted revised rate rules to the Maryland Public Service Commission, aiming to prevent residential customers from subsidizing the grid infrastructure costs for data centers and other large electricity consumers. This proposal, filed on September 1, is part of a broader mandate from the Maryland General Assembly, which required all investor-owned utilities and electric cooperatives to submit "very large load" rate schedules by September 1, 2026. Similar updates were also filed by Potomac Edison, Pepco, Delmarva Power, and Baltimore Gas and Electric.
The proposed tariff addresses Section 4-212 of Maryland's Public Utilities Article, which states that residential customers should not bear the financial risks associated with connecting large-load customers—defined as those with at least 100 megawatts demand and over 80% load factor—to the state's electric system. Regulators will evaluate whether the schedules ensure large customers cover transmission and distribution upgrade costs, and include protections against "stranded investments" if projects are delayed or canceled. Amazon Data Services is noted as a participant in Public Conference 72, the ongoing commission proceeding on this matter.
The issue is particularly relevant in Southern Maryland, where a developer recently proposed a 133-acre data center park in Lusby, Calvert County. SMECO President and CEO Sonja Cox emphasized that while the cooperative must provide service, data centers should directly pay the full cost of required infrastructure. The debate is set against a backdrop of rising electricity costs for SMECO members, highlighting the importance of the final tariff in allocating future costs and financial risks from large-scale economic development.