Rendering showing an aerial view of several large warehouse-type buildings that will include a metadata center planned for northeast Louisiana.
Meta is building the world's largest data center in North Louisiana. Entergy Louisiana plans to spend $3.2 billion on a power plant to operate the center, plus additional money for an accompanying gas plant in south Louisiana and transmission lines. (Meta)
Louisiana regulators have adopted a new rule that suspends some consumer protections if utilities need to quickly build power plants for certain industrial facilities, including data centers, that require huge amounts of electricity.
The rule change also mandates those large consumers pay half the cost of those new power plants, meaning regular ratepayers could be on the hook for the remaining cost.
On Wednesday, the Louisiana Public Utilities Commission, by a 4-1 vote, adopted a rule that creates a streamlined approval process that will radically reduce the time it takes to obtain approval for utility projects primarily targeting data centers. The lone dissenting vote came from Commissioner Davante Lewis, a Baton Rouge Democrat, who expressed concern that the proposal could harm consumers. Lewis argues the commission should focus on lowering the cost of energy for home consumers rather than the world's richest companies such as Meta, the parent company of Facebook and Instagram, which is building the world's largest artificial intelligence data center in northeast Louisiana.
Commissioner Jean-Paul Coussan, a Lafayette Republican, wrote the directive under Gov. Jeff Landry's economic development agenda aimed at attracting big business through state government grants, tax incentives, expedited permitting and industry-friendly regulations.
Coussan said his directive creates a “lightning-fast” path for some power plant proposals before the Public Utilities Commission, echoing the title of Landry's Sept. 16 report. decree to speed up the process of issuing permits to government agencies. In a telephone interview Thursday, he said it allows the commission to more easily replicate the rapid approval process it used to build Entergy Louisiana's three-turbine natural gas-fired power plant to operate the massive data center Meta is building in Richland County, which the commission signed off on in August.
The commission's vote this week suspends a competitive bidding requirement designed to ensure ratepayers get the best deal for new power plants. Typically, competitive bidding requires multiple contractors to submit estimates of what it will cost them to complete the job. The scores are then published and voted on in open session.
Government agencies prefer to conduct open bidding for most public works contracts to make the process transparent, avoid conflicts of interest, and help ensure the hiring of qualified contractors.
The new Civil Service Commission rules still require approval in open meetings, although there will be no need to accept multiple applications.
Koussan said commissioners will still support any proposals that appear to be too high. Any utility using the “lightning speed” method must still demonstrate that the proposal uses the “lowest reasonable cost,” he said.
“This could shorten our regulatory process from, say, two years to eight months,” Koussan said. “This is not a valid rule that can be abused.”
He cited a recently shortened schedule in which the commission waived its normal rules to accommodate Meta's needs. Commission approved Entergy's construction of a power plant for its northeast Louisiana facility in August despite strong public opposition to cutting the eight-month timeline considered very fast in energy regulation.
The three gas turbines Entergy is building for the Meta artificial intelligence data center will have the capacity to generate 2,200 megawatts of electricity, more than twice the power consumed by the entire city of New Orleans during peak hours. The electricity from the power plants is dedicated specifically to the Meta data center, although it will be connected to the larger electrical grid and will be able to sell electricity to other customers if necessary.
Through this arrangement, Meta agreed to pay 100% of the cost of all three turbines, which would otherwise have been added to Entergy Louisiana customers' monthly bills.
Critics of Cousan's directive include the Louisiana Energy Consumers Group, a trade coalition of 26 major industrial and petrochemical companies. The group's attorney, Randy Young, said at Wednesday's meeting that allowing companies with large electricity needs to cover only half the cost of new power plants is too lenient and puts other ratepayers at risk of having to pay the remaining cost even if they don't use the plants.
“If you need a new generation and want to give up [competitive bidding] As required, commit to paying the full cost of any generation you need, not just half of it,” Young told the commission.
Utilities will be able to use the commission's new lighting approval mechanism only for projects with projected electricity demand that the utility cannot supply without building additional proposed power plants. The rule also requires the utility to have a 15-year contract to sell power to its new customer, instead of the 10-year contract originally proposed by Coussan. He agreed to the change to allay some concerns of critics who said ratepayers would have to bear the cost of electricity if the contract was not renewed.
Logan Burke, executive director of the Alliance for Affordable Energy, said the Public Service Commission has long guaranteed utilities the right to earn an annual return on their investments, meaning they make money on new power plants and other additions to their infrastructure, passing the costs on to ratepayers. Previous rules were designed to protect consumers from such impacts, she said.
“Competitive proposals are not intended to slow down the process,” Burke said. “They are designed to ensure that we all get the most reasonable deal for every taxpayer dollar.”
Coussan said speeding up permitting for power plants is intended to spur economic growth and create new jobs for Louisiana residents.
The meta data center is expected to create approximately 500 jobs.
“I'm trying to create jobs and create a positive national perception of Louisiana for business,” Coussan said. “We have cheap and abundant energy sources like natural gas and the workers to deliver it.”
The Public Service Commission may use the new rule only with written approval from the Louisiana Economic Development Agency, which certifies the project's electrical needs. Under the law, utilities must give the commission 60 days' notice if they intend to seek expedited approval, and the commission must take a final vote on the proposal within eight months.
Young, the Louisiana Energy Users Group attorney, asked commissioners to consider more flexible criteria that would speed up permitting on a case-by-case basis. Lewis proposed an alternative that he said would provide a similar level of flexibility to balance expedited approval and consumer protections, but it was shelved indefinitely after his colleagues heard and approved Coussan's proposal.
The eight-month deadline to approve the data center power plant contrasts with the four-year delay and regulatory hurdles the commission presented to Young's group when it made a similar request for new energy. Young addressed the commissioners in June 2024 allow its members to purchase solar energy from an independent, non-utility company. At the time, panel members had waited more than four years for the commission to vote on the request, which was opposed by most of the state's utilities.
The commission gave Young its approval, but with a few major caveats: The group is allowed to buy a maximum of 500 megawatts, and the power must be carried through the utility's transmission lines, allowing utilities to approve or reject third-party agreements and ensure they still get a cut of power sales.
