House hearing examines utility safeguards, water oversight and the help communities need to evaluate large developments.
OKLAHOMA CITY — Oklahoma communities need to understand the costs and opportunities of increasingly large data centers before deciding whether to welcome or reject them, Rep. Mark Chapman, R-Broken Arrow, told lawmakers Tuesday as he opened a study on the industry’s growth.
Chapman requested the House Utilities Committee interim study to examine how the facilities affect electricity costs, water supplies, local infrastructure and economic development. He said their changing size, scale and resource demands warrant a closer look at the long-term consequences for communities.
People already rely on data centers for everyday activities such as booking airline tickets and processing credit card payments, he noted.
“We need them, and like it or not, we’re going to continue to need them,” Chapman said.
He said the facilities should pay their own way, their locations matter and decisions should remain local to the greatest extent possible. He urged communities to weigh the opportunities they might gain as carefully as the costs they might assume.
“Be certain you are fully informed and understand what you’re saying yes to, but be equally certain and informed you understand what you might be saying no to,” Chapman said.
He also challenged developers and operators to explain their plans and answer residents’ questions, saying the industry had not communicated its case well enough. Explaining those plans to residents, he said, is the industry’s responsibility.
The more than four-hour hearing included representatives of OG&E, Public Service Company of Oklahoma, Western Farmers Electric Cooperative and Southwest Power Pool; Google and developers Beale Infrastructure and Scale; environmental and water agencies; local officials; and Kingfisher County resident Kaily Ball.
Their testimony included calls for independent technical advice to help communities evaluate projects and a comprehensive state strategy to guide data center development.
Tulsa County Commissioner Stan Sallee described data center investment as an opportunity to expand the tax base and develop skilled workers. But he also said communities need somewhere to turn for advice independent of the organizations proposing and serving the projects.
“Trust but verify,” Sallee said.
He suggested a knowledgeable group could help officials evaluate assurances about water supplies, electric capacity and other impacts. His request was for technical help, rather than additional regulations.
Sallee also urged communities to discuss water, noise, setbacks and other concerns before a developer arrives.
“Be certain you are fully informed and understand what you’re saying yes to, but be equally certain and informed you understand what you might be saying no to.”
— Rep. Mark Chapman, R-Broken Arrow
Checking the effect on electric bills
Utility representatives described financial safeguards intended to keep existing customers from bearing costs attributable to large new users.
Kimber Shoop, OG&E’s director of regulatory affairs, outlined a proposal awaiting Oklahoma Corporation Commission approval. It would require large customers to pay for dedicated electric connections, make long-term commitments, meet minimum payment requirements and provide financial security.
Fees would apply if a customer leaves early or substantially reduces its demand.
Shoop said adding large customers can spread system costs across more electricity sales, potentially putting downward pressure on rates. But serving those customers also adds costs.
The proposed framework includes a charge to large users if their presence increases costs for other customer classes. Money collected would be credited back to those customers, he said.
Rep. Mike Lay, R-Jenks, asked how lawmakers could determine years later whether the growth had actually lowered or avoided costs for existing customers instead of shifting risk to them.
“What reporting should the legislature require?” Lay asked.
Shoop said future rate proceedings would compare the cost of serving other customers with and without the large users, allowing regulators to assess whether the protections were working.
He also said data centers are one of several reasons utilities must invest in their systems. Aging equipment, retiring power plants, other customer growth and reserve requirements also drive spending.
House Bill 2992, which took effect July 1, established protections addressing infrastructure costs created by qualifying new large electricity users. OG&E’s proposed service terms would operate within that framework, Shoop said.
Southwest Power Pool, the regional grid operator, described a separate responsibility: studying whether transmission infrastructure can reliably handle proposed demand. Its representative said regional officials are also reviewing how transmission costs are allocated as large users seek connections.
Water use depends on the project
Environmental officials said data centers differ in their cooling systems, power supplies and permitting needs.
Rob Singletary, executive director of the Oklahoma Department of Environmental Quality, said his agency regulates applicable air emissions and water-quality issues. Local siting decisions, water rights and electric rates fall under other authorities.
He said the agency’s current data center permitting workload was manageable and generally less complex than its work involving refineries and manufacturing facilities.
Chris Neel, water rights administration division chief at the Oklahoma Water Resources Board, described a limit in the board’s information: When a data center obtains water through a municipality’s existing supply, the board does not receive the facility’s individual demand information unless it has a specific permit for the data center.
Developers described different approaches, including water-cooled facilities, closed-loop cooling and power generated on-site. Those differences affect what agencies must review and what communities need to know about a particular project.
Senate Bill 259, effective Nov. 1, restricts data center use of groundwater in cooling systems that consume it through evaporation or discharge without recirculation. It also updates groundwater reporting and enforcement requirements.
Singletary said recent discussions with state and federal officials identified a broader need.
“Each state needs some kind of comprehensive state strategy when it comes to data centers,” he said.
He cited cooling requirements, water use and electricity consumption as questions such a strategy could address.
Benefits and commitments
Pryor Mayor Zac Doyle described benefits from Google’s long presence in his community, including jobs, business partnerships and infrastructure investment. Sallee emphasized potential tax revenue and the experience construction projects can provide electricians, plumbers and other skilled workers.
Company representatives also described investments, local contracting and community partnerships.
Ball, whose family farms and ranches in Kingfisher County, urged lawmakers to make research, technical expertise and project information easier for communities and residents to obtain.
She proposed a shared platform connecting existing state resources, rather than requiring each community to assemble the information on its own. She also called for enforceable commitments that last through a project’s lifetime and a review of county authority.
“There’s a huge gap in what we are asking our counties to regulate and what power they have to regulate them,” Ball said.
Committee Chairman Mike Dobrinski, R-Okeene, expressed interest in a framework that could streamline the process. The hearing ended without adopting a statewide strategy or new requirements.
A House news release issued Wednesday said Chapman will continue reviewing the information gathered during the study to determine whether additional legislative action is warranted.
