The part that does the most work here is the opportunity cost of waiting, and I think it is more general than the data-center case. Time to power is what you get when a scarce resource is rationed by queue rather than by price. The interconnection queue allocates by position, not by willingness to pay, so the value of moving up the line has to appear somewhere else. It appears as firms paying above levelized cost for arrangements that arrive sooner. That premium is the price of time the tariff was not allowed to charge. The whole spectrum you describe, from specialized tariffs through co-location to self-supply, can be read as firms buying their way out of a non-price rationing mechanism.
More broadly, the workarounds are evidence about the institution itself. Coase taught us to watch what firms do when transaction costs become important. Here, firms repeatedly incur higher private costs to escape the queue. That is information. It suggests the queue is allocating a scarce resource differently than a market would. The workaround is not merely a response to the rule. It is evidence about the rule.
Which makes Commissioner Chang's point the one I would develop further. If a co-located load benefits from synchronization it does not pay for, the difference is borne by everyone else, and the FERC framework has to determine administratively what a controllable load actually uses. You call the framework a promising attempt, and it may be, but the failure mode deserves naming. The regulator is being asked to discover administratively what competitive prices ordinarily reveal, and nothing in the process will tell it when the answer is wrong.
Your line that there is no regulatory-free electricity is the honest one, and I would put even more weight on it. Memphis did not escape regulation by generating on site. It traded an interconnection queue for an air permit. The firm changed which regulator it answers to. The make option is a substitution of constraints rather than an exit from them.
The Williamson framing holds up because you use it to explain rather than decorate. Control over investment, financing, and timing without operational control is an accurate description of what Microsoft bought, and anchor investor is exactly the right term.
Coming back two years later to grade your own hypothesis against the evidence is rarer than it should be.
God created Mother Earth which lives and breathes Life , who would want to change what God created ?
What are data centers ?
How much energy is required for the collection of data ?
How much water is required for the collection of data ?
How much land is required for the data centers ?
What environmental impact do the data centers have on the land and air quality , and life itself ?
How does this affect the daily lives of ordinary people ?
What is the cost of the power source ?
What is data collection being used for ?
Who is using data centers for the surveillance of ordinary citizens ?
What are weather modifications ?
Who controls the voting systems , are there rules and regulations in place ?
What are the regulations regarding the banking system , and monies held which belong to ordinary citizens ?
What happens to the colleges and universities ?
Who decides what is available for research and development ?
Who decides what medication can be used and what is available ?
What are fifteen minute cities ?
What is AI data centers capable of ?
Who has the capabilities of deciding who lives and who dies ?
What is " Law Fundamental ?"
AI in the wrong hands , has the capabilities of destroying large swathes of populations , including life itself , which is a war against humanity , there are those with pretended power , who have the insatiable desire of a will to kill , meanwhile , there are those who have an understanding of the true situation are are making in roads to stop a catastrophe from happening .
Stealing Your Vote = Stealing Your Fundamental Freedoms = Treason.
This is an especially valuable update to your 2024 essay because it shows that the data-center power question is no longer simply “make or buy.” It has become a much more varied problem of contracts, alliances, control rights, and risk allocation.
The feature that stands out most to me is how public concern about cost-shifting is beginning to shape the actual institutional arrangements. Hyperscalers and data-center developers are increasingly being asked—and appear willing—to make long-term commitments, provide collateral, accept minimum bills and exit charges, bear curtailment risk, and anchor investments in specific generating assets. They want greater control over the timing and reliability of electricity supply, but that control increasingly comes with obligations that make it harder to shift the full risk of speculative infrastructure onto local ratepayers.
That does not mean the public-interest problem has been solved. As your discussion of co-location makes clear, even a data center drawing little power from the grid may still depend on transmission, synchronization, reserves, and backup service. The difficult question is therefore not whether these projects use the larger system, but how accurately their contracts and rates reflect the costs and risks they create.
The essay remains focused on electricity, so the related public concerns about water use, air emissions, land use, and environmental degradation remain outside much of the analysis. But as an account of how public scrutiny, regulatory intervention, and the urgency of “time to power” are changing the structure of the AI buildout, this is an important and unusually concrete update.
Lynne,
The part that does the most work here is the opportunity cost of waiting, and I think it is more general than the data-center case. Time to power is what you get when a scarce resource is rationed by queue rather than by price. The interconnection queue allocates by position, not by willingness to pay, so the value of moving up the line has to appear somewhere else. It appears as firms paying above levelized cost for arrangements that arrive sooner. That premium is the price of time the tariff was not allowed to charge. The whole spectrum you describe, from specialized tariffs through co-location to self-supply, can be read as firms buying their way out of a non-price rationing mechanism.
More broadly, the workarounds are evidence about the institution itself. Coase taught us to watch what firms do when transaction costs become important. Here, firms repeatedly incur higher private costs to escape the queue. That is information. It suggests the queue is allocating a scarce resource differently than a market would. The workaround is not merely a response to the rule. It is evidence about the rule.
Which makes Commissioner Chang's point the one I would develop further. If a co-located load benefits from synchronization it does not pay for, the difference is borne by everyone else, and the FERC framework has to determine administratively what a controllable load actually uses. You call the framework a promising attempt, and it may be, but the failure mode deserves naming. The regulator is being asked to discover administratively what competitive prices ordinarily reveal, and nothing in the process will tell it when the answer is wrong.
Your line that there is no regulatory-free electricity is the honest one, and I would put even more weight on it. Memphis did not escape regulation by generating on site. It traded an interconnection queue for an air permit. The firm changed which regulator it answers to. The make option is a substitution of constraints rather than an exit from them.
The Williamson framing holds up because you use it to explain rather than decorate. Control over investment, financing, and timing without operational control is an accurate description of what Microsoft bought, and anchor investor is exactly the right term.
Coming back two years later to grade your own hypothesis against the evidence is rarer than it should be.
Jeffrey
God created Mother Earth which lives and breathes Life , who would want to change what God created ?
What are data centers ?
How much energy is required for the collection of data ?
How much water is required for the collection of data ?
How much land is required for the data centers ?
What environmental impact do the data centers have on the land and air quality , and life itself ?
How does this affect the daily lives of ordinary people ?
What is the cost of the power source ?
What is data collection being used for ?
Who is using data centers for the surveillance of ordinary citizens ?
What are weather modifications ?
Who controls the voting systems , are there rules and regulations in place ?
What are the regulations regarding the banking system , and monies held which belong to ordinary citizens ?
What happens to the colleges and universities ?
Who decides what is available for research and development ?
Who decides what medication can be used and what is available ?
What are fifteen minute cities ?
What is AI data centers capable of ?
Who has the capabilities of deciding who lives and who dies ?
What is " Law Fundamental ?"
AI in the wrong hands , has the capabilities of destroying large swathes of populations , including life itself , which is a war against humanity , there are those with pretended power , who have the insatiable desire of a will to kill , meanwhile , there are those who have an understanding of the true situation are are making in roads to stop a catastrophe from happening .
Stealing Your Vote = Stealing Your Fundamental Freedoms = Treason.
How to Check Your Vote
https://sleazeexpo.wordpress.com/crux-votegateuk-legal-proof-of-5-voting-categories/
Go in Peace as Light awakens the Truth
This is an especially valuable update to your 2024 essay because it shows that the data-center power question is no longer simply “make or buy.” It has become a much more varied problem of contracts, alliances, control rights, and risk allocation.
The feature that stands out most to me is how public concern about cost-shifting is beginning to shape the actual institutional arrangements. Hyperscalers and data-center developers are increasingly being asked—and appear willing—to make long-term commitments, provide collateral, accept minimum bills and exit charges, bear curtailment risk, and anchor investments in specific generating assets. They want greater control over the timing and reliability of electricity supply, but that control increasingly comes with obligations that make it harder to shift the full risk of speculative infrastructure onto local ratepayers.
That does not mean the public-interest problem has been solved. As your discussion of co-location makes clear, even a data center drawing little power from the grid may still depend on transmission, synchronization, reserves, and backup service. The difficult question is therefore not whether these projects use the larger system, but how accurately their contracts and rates reflect the costs and risks they create.
The essay remains focused on electricity, so the related public concerns about water use, air emissions, land use, and environmental degradation remain outside much of the analysis. But as an account of how public scrutiny, regulatory intervention, and the urgency of “time to power” are changing the structure of the AI buildout, this is an important and unusually concrete update.