Calculating the cost of a data center gold rush in New Mexico

yahoo.com · Feb 22, 2026 · Collected from GDELT

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In the past year, plans for two gargantuan data centers have been announced in New Mexico, and electric utilities have come to see data center development as a driving force behind growth and need for increased generation.With several data center projects in the works — and requests for many more developments in the state — the potential cost of the facilities, to both the warming climate and to residents who share the energy grid, has emerged as a looming concern.Public Service Company of New Mexico’s forecasts for energy demand show the utility is expecting steep increases in “large energy users” in the coming years.The utility currently serves about a dozen data centers, a PNM spokesperson said, with their collective electricity use in the “hundreds of megawatts.”As some powerful players flock to New Mexico looking to invest billions of dollars in the coming years on data centers, those in the state pushing for stricter laws and closer oversight of the facilities find themselves playing legislative catch-up as developments move forward.Data centers make up an increasing portion of commercial requests to connect with PNM’s grid in the past five years, rising from 15% in 2021 to 47% in 2025, according to a January presentation executives gave to stakeholders on the utility’s resource planning process. Data centers made up the vast majority of new projects impacting the utility’s forecasts. Concerns center on the amount of both water and power data centers require, and the potential costs to consumers to build out infrastructure.PNM spokesperson Eric Chavez noted the time frame for delivering large projects “could be up to 10 or 15 years.” He declined to provide details on proposed projects or data centers.Chavez said the utility has seen a steady increase in inquiries for data center interconnections since 2016, with “a significant uptick” beginning in 2023. The requests include expansions of existing projects as well as new projects, ranging from 1 megawatt to 1 gigawatt, he noted.Concerns have grown nationwide about spiking utility costs from the buildout of data centers, with growing community backlash to proposed developments and rejection of projects.A recent paper published by the Harvard Environmental and Energy Law Program notes data centers threaten to increase utility bills in two ways: new utility infrastructure costs that are spread across customers as well as spikes in demand that increase costs in energy markets.One of the paper’s authors, Ari Peskoe, argued for utility regulators to pay closer attention to infrastructure costs and to provide safeguards for customers against paying for the data center boom.“PNM is committed to working through the regulatory process to ensure that existing customers are not asked to subsidize the costs created by new large loads,” Chavez said.New Mexico Public Regulation Commissioner Pat O’Connell declined an interview on data centers this week. He forwarded questions to a spokesperson for the agency.Spokesperson Patrick Rodriguez noted in an email data center development and related costs are “topics that could come before the commission in future formal proceedings.”“To ensure the integrity of the process and maintain our role as a neutral decision-maker, we must be careful about discussing these matters outside of a formal case,” Rodriguez wrote.‘If you build it, they will come’Retired utility attorney Bruce Throne of Santa Fe said he is concerned about the effects of New Mexico’s “data center gold rush” on both the environment and utility customers’ pocketbooks.Throne was one of several attorneys who represented Facebook when the company negotiated terms for its data center in Los Lunas, but he said the projects proposed in the state now are “a totally different animal,” noting the enormous scale of energy use and the plans for development of fossil fuel generation.He pointed to the most controversial such project in the state, Project Jupiter, which is planned for a site near Santa Teresa at the state’s southern border to run on two grids, powered by natural gas turbines built on site. The facility, being developed by Texas-based BorderPlex Digital Assets, is expected to generate up to 2,880 megawatts of power and emit 14 million tons of greenhouse gases per year, according to applications submitted to the state Environment Department.The project, which is expected to support artificial intelligence for technology companies OpenAI and Oracle, was made possible by a last-minute addition to state legislation in 2025 that allowed “the generation and distribution of self-sourced power,” or a microgrid.Another project, approved by Chaves County officials in October, promises an 8,500-acre campus outside Roswell with a data center as well as solar power generation, battery storage, natural gas and geothermal cooling, with a total 1.24 gigawatts of capacity.The microgrid law, 2025’s House Bill 93, has raised concerns about the creation of essentially a loophole around the Energy Transition Act, the state’s hallmark 2019 law that requires major electric utilities to transition to carbon-free energy by 2045.Apart from environmental concerns, Throne said the law could also expose utility customers to new costs from facilities like Project Jupiter, as it allows utilities to purchase power or assets from microgrids, which he said “would bring those costs into rates for other customers.”An unsuccessful bill introduced in this year’s legislative session sought to regulate emissions for microgrids and create some safeguards for utility customers; Senate Bill 235 passed the Senate and died in the House Judiciary Committee.Throne pointed to another bill that passed last year, Senate Bill 170, aiming to speed up the process of regulatory approval for energy upgrades with an approach centered on a motto: “If you build it, they will come,” as Sen. Michael Padilla, D-Albuquerque, described his bill. The law requires the Public Regulation Commission to consider requests for energy infrastructure on an expedited timeline of six months.Throne criticized the new law as basically allowing utilities to develop infrastructure before they could prove it is needed, which could raise costs for everyone.PNM filed requests in recent months for a substation, new transmission lines and other energy infrastructure upgrades in preparation for planned commercial developments in and around Albuquerque, citing several data centers as potential tenants.The list of Albuquerque-area projects would be developed in anticipation of industrial energy needs in the area.The proposed projects include the construction of a new substation at the Westpointe 40 business park on the west side of Albuquerque and new transmission lines and upgrades for several substations on the south side of the city as well as some running west of Rio Rancho and Albuquerque.PNM estimated the total cost of the infrastructure and upgrades at about $166 million, which would be recovered in future utility rates.“But they come in, and as long as they can show that there are potential customers that they could serve if that plant was put in, they can go ahead and build it,” Throne said. “I don’t see where the commission has any basis on which they can deny it.”Infrastructure costs for new data centers are “what’s really hurting residential and small business customers, particularly, in other states,” he said.Economics vs. consumer costsPadilla, who was a sponsor of both HB 93 and SB 170 in 2025, defended his microgrid amendment as a measure that protects utility customers from bearing the costs of data centers.“Now you can build a microgrid that produces energy for your project, therefore you’re not relying on on the local utility, pushing rates up that way and creating so much demand,” Padilla said.He said Public Regulation Commission approval for some commercial projects has taken upwards of three years in the past, and the state has missed out on opportunities due to the lag.“New Mexico will never be looked at seriously if it takes that long to figure out, ‘How am I going to power my business?’ ” he said, adding six months is “plenty of time for the PRC to do their work and to say yea or nay.”To Padilla and many others — including Gov. Michelle Lujan Grisham and New Mexico Economic Development Secretary Rob Black — data centers are valuable economic development projects that can provide jobs and bring in tax revenue.Black told lawmakers during an interim committee meeting last year his agency was in discussion with 12 developers interested in building data centers in New Mexico.The Economic Development Department declined to provide details about any data center projects currently underway.“We’re always in conversation with companies interested in New Mexico, and those early discussions are confidential, so we’re not able to confirm specific proposals,” said Staci Drangmeister, a spokesperson for the agency. “If a project becomes concrete, it will go through a public process and we’ll share details with the community.”Data center boosters have in recent months launched several efforts to sway public opinion regarding the controversial projects.Earlier this month, residents in Santa Fe received mailers urging support for Doña Ana County’s Project Jupiter as an “opportunity to reshape our future and transform.” The postcards, attributed to a group called Elevate New Mexico, offered a link to send public comments to the state Environment Department in support of the project’s air permits.Another group called Upward New Mexico has similarly boosted data center development online.It isn’t clear who is associated with the advocacy groups. Messages to both groups seeking more information did not yield a response.State Sen. Jeff Steinborn, D-Las Cruces, said in his experience, residents are “very, very concerned” about data center development.“We’ve got a problem because we have a legal regime that really gives cost exposure to ratepayers