OKLAHOMA CITY -- Big tech companies have plans to build more than a dozen data centers in Oklahoma to keep up with increased computing needs from artificial intelligence.
Some will require enough electricity to power entire cities. Oklahoma's two largest utility companies are investing more than a billion dollars in new sources of power to keep up with demand and plan to pass on some of the cost to residential customers.
The Frontier found at least 18 data center projects in the state that are either under construction or awaiting government approvals. The Frontier used public announcements, land records, meeting agendas and air permit applications to compile that count.
The state's two largest utilities, Oklahoma Gas and Electric and Public Service Company of Oklahoma, have said in regulatory filings that new demand from data centers and other industries will require more power than they can now produce. The utilities already are looking to pass the cost of new transmission lines and power generation on to all customers, including residential users. Though power prices are lower compared to the nation at large, Oklahoma residential customers already pay some of the highest prices for electricity in the region, second behind Texas, according to the U.S. Energy Information Administration. The average per-kilowatt hour price for Oklahoma residents was up 7% in September from the same time the previous year.
John Laws, Gov. Kevin Stitt's former secretary of budget and now a consultant for OG&E, told state regulators in May that big new users want assurances that OG&E will have enough power to fill their needs before they sign agreements with utilities. Laws noted that these big new users come from a variety of industries, including manufacturing, refineries, the federal government, data centers and cryptocurrency.
"The changes in recent prospective loads are unprecedented, both in the sheer size and the volume of requests," Laws said.
A report from the Corporation Commission's Public Utility Division in June warned that the data center boom could lead utilities to overestimate demand based on speculative proposals and unverified projections. Some data centers could close or never be built, leaving the remaining ratepayers in the state to pay for billions of dollars in new power generation.
Historically, adding new large customers has helped spread fixed costs across a broader base, supporting affordability for all customers, said Matt Rahn, a spokesperson for PSO.
"Our commitment is to protect our existing customers by ensuring new customers, including data centers, pay their fair share or contribution to the costs their load on the system creates," Rahn said. "We're also evaluating a large energy use tariff to further ensure prices reflect the cost to serve each customer group, keeping rates fair and balanced for all."
Ken Miller, vice president of public and regulatory affairs for OG&E, said the company is building protections for existing customers into its new large load contracts and working to develop a new tariff for larger customers.
"The need is just tremendous," Miller said. "As you see, not just here in Oklahoma, but the country and world, the world is electrifying, and we are all trying to keep up with that increased pace of electrification."
A few of the proposed data centers in Oklahoma include plans for solar energy facilities to power them, including a set of five data centers planned in Stillwater and at least one of two proposed Google data centers near Muskogee, land and air permitting records show.
Oklahoma passed a law earlier this year that gives companies more options to buy or generate power on-site. But the law does not require companies to generate their own power.
New law could add charges
Another new state law, Senate Bill 998, which took effect in August allows utilities to recoup costs from customers to build new natural gas power plants as soon as construction begins.
OG&E lobbied for the new law. The utility believes it will save ratepayers money in the long run as it keeps financing costs from building up over the years, Miller said.
"It's akin to a mortgage and you're building a house and paying off the interest early instead of later," he said. "The savings to customers comes by eliminating the long-term financing of those construction costs."
But Oklahoma attorney A.J. Singer, who represents the Oklahoma chapter of AARP, says it's more like an apartment building where current tenants pay more each month so the landlord can build new rental units, while current renters will never see any actual benefit. AARP lobbied against the legislation and believes it will only benefit large, for-profit utility companies, said Joy McGill, AARP's associate state director of advocacy.
OG&E already has unsuccessfully tried this year to use the new law to charge customers more while it builds two new natural gas power plants as part of a $506.4-million plan to increase generating capacity. OG&E proposed charging customers an average of 55 cents extra per month starting in 2026, which would increase each year to an average $4.41 a month by 2031.
The Oklahoma Corporation Commission, which regulates utilities in the state, rejected OG&E's cost-recovery plan in November because the new law hadn't taken effect yet when the company submitted its application. The commission will allow OG&E to recover some of its costs to build the new generators, but only after they are put into service and provide power to customers. The average cost to consumers was not included in the Corporation Commission order.
The commission also ordered OG&E to come up with a plan to create a new tariff on large users like data centers by July 2026, in hopes of defraying future costs for residential customers. Both AARP and the Oklahoma Industrial Energy Consumers group have asked the commission to reconsider its decision to allow OG&E to recover costs from customers, though the commission has yet to rule on that matter.
In its current case before the Corporation Commission, Public Service Company of Oklahoma also is seeking to pass along the costs of building and buying new generation to customers, including in-progress construction costs to build two new natural gas generators.
PSO said in its application filed in September that it plans to purchase and build more than $1.25 billion in new sources of energy and will seek to recover $539.8 million in construction costs from ratepayers to build new natural gas-fired generators that are part of the expansion plan.
A Corporation Commission administrative law judge is scheduled to hear the case in February.
Singer said AARP likely will oppose the request, but he hopes the Corporation Commission will work to require big industrial users to shoulder more of the cost in the future.
"There needs to be some kind of guarantee from these data centers that if the utility and its ratepayers expend a bunch of funds to build out infrastructure and generation for these extremely large loads, that they're going to be here in 15, 20, 30 years," he said.
A shortage of power
Demand for electricity from data centers is expected to triple by 2030, making up around 14% of all power usage in the U.S., according to a recent report by McKinsey & Company.
Most of the increased demand comes from commercial and industrial customers that are coming on to the grid and "with electric needs far greater than PSO has experienced in the past," Matthew Horeled, vice president of regulatory and finance for PSO said in testimony before the Corporation Commission.
As of September, PSO had 11 new "large load" customers under letters of agreement or contract, representing about 779 megawatts, enough energy to power around half a million average homes.
Several industrial parks in PSO's service area were also in late-stage negotiations with large-load projects, Horeled said.
Unless it acquires new sources of power, PSO will face a 31% power deficit of 3,124 megawatts by 2031, a gap that could power 2 million average Oklahoma homes, according to its application to recover costs from customers.
One new customer that recently signed a preliminary letter of agreement with PSO will eventually need over 1,000 megawatts at any given time, roughly enough to power 666,000 average Oklahoma homes.
OG&E predicts that it too will eventually see a significant generation deficit unless it invests in new sources of power. By 2035, OG&E projects it will face a shortfall of 3,459 megawatts to meet demand, or about 38% higher than it is capable of generating.
OG&E already is preparing its next request for proposals to acquire new electrical generation resources, which will require it to bring a new application before the Corporation Commission in order to recover the cost of new generation from customers, a spokesman for the company said.