LAS CRUCES — If Project Jupiter is unable to clear its next big regulatory hurdle — obtaining a state air quality permit to establish a private microgrid — the massive artificial intelligence data center might have another power option under new legislation.
U.S. Sen. Martin Heinrich, D-N.M., introduced a bill Monday that aims to prevent utility customers from bearing the costs of data center infrastructure. The GRID Savings Act, proposed as Congress nears its summer recess, would make hyperscale companies pay for necessary upgrades to the grid.
“The legislation … increases transparency, protects grid reliability, and helps ensure that families and businesses aren’t left paying for infrastructure that only serves new, high-demand customers,” the bill’s fact sheet reads.
The Federal Energy Regulatory Commission would be responsible for issuing rules for hyperscale companies, according to the bill, which would provide them with the option of constructing their “own network upgrades and interconnection facilities.”
“I’m not a fan of the [data center] moratorium approach because I think it will simply push them to places with the lowest standards, and we don’t want a race to the bottom,” said Heinrich, the top Democrat on the Senate Energy and Natural Resources Committee, on a Politico podcast Monday. “I’m of the approach, set good standards: Make sure you’re bringing good union jobs to a community. Make sure you’re respecting water. Make sure you’re being transparent with the community and bringing economic value, including giving people relief from their overly high utility bills right now.”
There are ongoing debates over Project Jupiter’s transparency in Doña Ana County: The Foundation for Open Government filed a lawsuit against the county June 22 that originated with an allegation of an Open Meetings Act violation. County commissioners entered into a closed meeting Sept. 19 and subsequently agreed to pledge $165 billion worth of industrial revenue bonds for Project Jupiter.
Under these industrial revenue bonds, Project Jupiter cannot cause rates to increase for local power customers. The GRID Savings Act could align with this requirement; under the bill, hyperscale companies — those using 150 megawatts or more — must fund any changes to the grid. Project Jupiter’s estimated use of 700 to 900 megawatts falls solidly in the hyperscale category.
Public Service Company of New Mexico, the state’s largest electric utility, also supports the idea of requiring data centers to cover costs of connecting to the grid.
”PNM completely agrees that these new large electricity users need to cover any incremental costs they are adding to the system and pay for a share of the existing system, and we have already stated this in a recent regulatory filing,” spokesperson Eric Chavez said in a statement. “We are 100% committed to protecting our customers and we are working on developing a special rate, also known as a large load tariff, to do just that.”
Project Jupiter’s most recent power plan calls for a microgrid with natural gas fuel cells. But it needs an air quality permit from the New Mexico Environment Department to move forward, and the permit request faces strong opposition.
However, if Heinrich’s bill becomes law and the state denies Project Jupiter’s air quality permit, developers could potentially turn to El Paso Electric to fuel the data center.
Attorneys for the developers successfully pushed the New Mexico Environment Department last week to move a hearing on the data center’s air quality permit from October to Sept. 14, citing too little time between the scheduled hearing and the Environment Department’s Nov. 23 deadline to issue the permit. But Colin Cox, a senior attorney at the Center for Biological Diversity’s Climate Law Institute, has filed a new motion requesting that the hearing be moved back to its original date.
Those in favor of the October data told news site Source New Mexico, which first reported the date change, they need preparation time for the complex hearing.
Project Jupiter also faces another regulatory roadblock: the yet-to-be-approved natural gas pipeline. New Mexico State Land Commissioner Stephanie Garcia Richard doubled down last month on her denial of an application to run a portion of a natural gas pipeline for the project through state trust land.
Mahesh Thiagarajan, vice president of Oracle Cloud Infrastructure, one of the companies behind Project Jupiter, floated a local grid fallback plan at a Doña Ana County Commission meeting last week.
“If the permit’s not available, then it’s the grid. If the grid is not available, I don’t see how I would power the data center. It’s impossible,” Thiagarajan told commissioners.
His proposal met with skepticism from some commissioners at the meeting, who reminded him it would be difficult to ensure utility customers’ rates remain unaffected while connecting to El Paso Electric’s grid.
“You just said that … you would talk to El Paso Electric about when power is available on the grid. That triggered me a little bit because in our IRB, that’s not allowed,” Commissioner Christopher Schaljo-Hernandez said. “You are not allowed to be buying power from El Paso Electric … because then it gets put back onto our ratepayers. So I don’t think that should be a part of the conversation.”
County Commission Chair Manny Sanchez challenged Schaljo-Hernandez’s assertion a contract with El Paso Electric was out of the question. He pointed to legislation like Oregon’s POWER Act as a potential solution — the state law led to substantial rate hikes for large energy users like data centers.
“It’s my expectation that the burden of electric infrastructure needs for Project Jupiter does not fall on the residents of Doña Ana County,” Sanchez wrote in an email Monday. He pointed to Heinrich’s proposed GRID Savings Act. “... I believe [this legislation] could be an avenue for Project Jupiter to fulfill their requirements if the air permit is denied.”
He noted Heinrich’s legislation is “in line with the existing conditions within the Community Benefits Agreement of the approved IRB.”