Regulated Utility vs. Competitive Market Sites for Data Centers

In a vertically integrated state, a single utility owns generation, transmission and distribution in its service territory. The state commission approves its resource plans, sets its rates and decides how costs are shared among customer classes. A data center in that territory buys bundled service from that utility, under that utility’s tariff.

In a restructured or competitive state, those functions are split. Under retail choice, a customer buys its power from a competitive retail supplier while the local utility still delivers it over its wires.¹ In its most recent count, based on 2021 data, EIA found 13 states and the District of Columbia with active statewide residential retail choice programs, not counting Texas, which runs its own program in the ERCOT region; Michigan, Nevada, Oregon and Virginia offered limited choice, largely to non-residential customers.¹

Wholesale market membership is a separate question. A vertically integrated utility can still buy and sell in an ISO or RTO market, and an RTO can span both regulated and retail choice states. Our guide to ISOs, RTOs and utility territories maps the regions; this guide focuses on how the retail model changes the deal for a large load.

The main advantage of a regulated utility is that it can plan and build generation for a specific load, and recover the cost through rates the commission approves. That makes it possible to underwrite a very large campus with a single counterparty responsible for both the power plant and the wires.

Georgia shows the model at scale. On December 19, 2025, the Georgia Public Service Commission voted 5–0 to approve a stipulation allowing Georgia Power to add 9,885 MW of new resources, most of it to serve large customers such as data centers; about 58% is natural gas and 42% battery and solar, with construction estimated at $16.5 billion.² Commission staff had argued for certifying far less, roughly a third of the request, and for requiring signed data center contracts before approving the buildout.⁹

Louisiana shows the single-project version. On August 20, 2025, the Louisiana Public Service Commission voted 4–1 to approve Entergy Louisiana’s plan for three new gas plants to serve Meta’s Richland Parish data center.⁵ The package included a $550 million transmission line; Entergy said Meta’s agreement would cover the generation costs, while opponents argued other customers would bear part of the transmission cost.¹⁰

The trade-off is that the load becomes part of a public regulatory proceeding. Timing depends on the commission’s calendar, intervenors can contest the plan, and the final cost allocation is set by regulators rather than negotiated privately. Georgia also adopted a rule in January 2025 that lets Georgia Power bill new customers above 100 MW based on the risks of their projects, requires their contracts to be filed with the commission and allows minimum billing terms.⁷

Most of Texas is served by ERCOT, where the retail program operates under state law rather than the multistate pattern elsewhere.¹ A large customer contracts for energy with a retail supplier or arranges its own supply, while a transmission and distribution utility builds and operates the connection. That separation gives buyers more ways to structure supply, including fixed-price contracts, index pricing and on-site or co-located generation.

It also makes ERCOT a magnet for speculative load. ERCOT was tracking about 474 GW of large-load interconnection requests by mid-2026, roughly 90% of it identified as data centers, against an all-time hourly peak of 91,089 MW set on July 22, 2026.⁶ In August 2026, Governor Abbott ordered an audit of the queue, noting that the requests were more than five times the state’s record peak.⁶

Texas responded with Senate Bill 6, signed in June 2025. It applies to loads of 75 MW or more, requires large non-critical loads to accept curtailment during firm load-shed emergencies and requires remote-disconnect capability for customers connecting after December 31, 2025.³ It also requires a screening study fee of at least $100,000, disclosure of parallel requests elsewhere in Texas and protocols for co-locating loads with existing generators.¹¹ In September 2026, the PUCT adopted its implementing interconnection rule, dropping a proposed $50,000-per-MW interconnection fee and setting a flat $100,000 study fee.¹² Our SB 6 guide and ERCOT site selection guide cover the detail.

In PJM, energy and capacity are priced in regional markets, and data centers now account for most of the forecast load growth behind those prices. PJM’s auction for the 2028/2029 delivery year, held in July 2026, cleared at the $325/MW-day cap across the region, the third consecutive auction to clear at the cap; without the price collar it would have cleared at $554.72, and it still fell 6,831 MW short of the reliability requirement.⁴ The collar covers four auctions, through 2029/2030.⁴ The previous auction, for 2027/2028, cleared at its $333.44/MW-day cap, and data centers accounted for 5,100 MW of the 5,250 MW increase in forecast peak load behind it.¹³

Even where supply is competitive, the wires utility sets the terms of delivery, and those terms have tightened. In July 2025, Ohio regulators approved an AEP Ohio tariff requiring new data center loads above 25 MW to pay for at least 85% of subscribed capacity for up to 12 years, including a four-year ramp, with exit fees and proof of financial viability.⁸ See large-load tariffs and electric service agreements.

Federal rules are changing too. In December 2025, FERC found PJM’s tariff unjust and unreasonable for lacking clear terms for generators serving co-located load, and directed new transmission service options, including an interim non-firm service subject to curtailment while upgrades are built.¹⁴ Developers must still follow state franchise and retail supply laws, so a co-location plan that works in one PJM state may not work in another.¹⁴ On June 18, 2026, FERC went further, ordering all six RTOs and ISOs, including PJM, to justify or reform their tariff rules for interconnecting large loads, with responses due in August 2026.¹⁵ Our PJM capacity price guide covers the market in depth.

The comparison below summarizes the general pattern. Individual utilities, states and contracts vary widely, so treat it as a checklist of questions rather than a verdict.

A regulated site suits a buyer who wants one accountable counterparty and is willing to accept a public process. A competitive site suits a buyer who wants to manage its own supply and price risk, or who plans on-site generation.

The difference between the two models is narrowing for very large loads. Regulators in regulated and competitive states alike have concluded that data centers should carry more of the cost and risk of the infrastructure built for them, and the resulting rules look similar.

For site selection, this means a lower headline tariff is less decisive than it used to be. The real comparison is the full set of commitments: minimum demand, contract length, collateral, curtailment exposure and who pays for upgrades. Our guide to electricity rates for data centers explains how to compare bills, and who pays for transmission upgrades covers cost allocation.

Start from the load, not the market label. These questions usually decide which model fits:

1. 01Does the project need new generation built for it? If so, a regulated utility with an approved resource plan may be the clearest path, as in Georgia and Louisiana.
2. 02Can the load flex or curtail? If yes, competitive markets and interim non-firm service options can shorten the path to power.
3. 03Does the buyer want to manage energy price risk itself? Competitive markets reward buyers who can contract and hedge; regulated tariffs shift that work to the utility and commission.
4. 04How much exposure to capacity prices is acceptable? In PJM, the last three auctions have cleared at the cap.⁴
5. 05What will the wires utility require? Minimum demand terms, collateral and contract length now apply in both models.

Whatever the model, the first conversation is with the utility that owns the wires at the parcel, because it controls the study, the upgrades and the energization date. A load study is where those answers become concrete. If you are weighing parcels in different market structures, BlackForge can review a site for power path, utility territory and the other constraints that decide whether a campus can be built.