Electric utilities across the country are tightening their rules on new AI data center customers, requiring binding financial commitments, collateral and steep engineering fees to separate genuine projects from speculative ones, known as “phantom” data centers in the industry.
The Wall Street Journal reports that AI’s electricity appetite has buried utilities in requests for grid connections, and many of those requests are never going to turn into actual buildings. Wood Mackenzie, a research firm, puts only 23 percent of disclosed data-center requests in the “high confidence” category. The rest is speculation.
Jeanne Jones, executive vice president of finance and strategy at Exelon, a utility operating across the Mid-Atlantic and Midwest, said inquiries began ballooning in 2024, and the individual asks got bigger too. A typical request used to be around 50 megawatts, about enough to power 50 Walmart stores. Now companies ask for 1,000 megawatts or more, the kind of output you’d expect from a large nuclear reactor.
Exelon used to study each project on its own. But once service requests from large customers tripled to 18,000 megawatts, the company switched to studying them in clusters instead. Jones described the challenge as separating “real growth that’s going to happen versus speculative growth.”
“We would get these questions internally but also externally: ‘How do you know what’s real?’” Jones said.
Exelon’s fix was to require binding financial commitments and collateral before granting a connection. That dropped the company’s high-probability project list from 18,000 megawatts to 11,000, with the remaining projects posting roughly $1 billion in collateral.
