Utility regulators in Indiana have approved a settlement agreement that sets clear rules for connecting data centers and other large-load users to the grid.

The revised tariff agreement ensures that large load users like data centers will pay for the grid upgrades necessary to serve them, preventing the costs from being passed on to existing customers.

The agreement came after a settlement filed by Indiana Michigan Power (I&M), the Indiana Office of Utility Consumer Counselor, Citizens Action Coalition of Indiana, Amazon Data Services, Google, Microsoft, and the Data Center Coalition in November.

In addition, the new settlement agreement will amend I&M’s industrial power tariff, which will apply to any new or expanded facilities with a contract capacity of at least 70MW or 150MW aggregated across a company.

The agreement will also defer cost allocation issues to future proceedings instead of setting a cost allocation or specific methodology for large-load customers.

Indiana is seeing significant capacity growth across its footprint. I&M projects that peak load capacity in Indiana will jump to more than 7GW by 2030, up from 2.8GW today.

I&M plans to use the funds accrued to support grid modernization efforts across the state.

The Indiana data center market saw substantial growth through 2024. Amazon, Microsoft, and Google have all announced major campus projects in Indiana this year. Meta, US Signal, DataBank, Netrality, and Digital Crossroads also have a presence in Indiana.

However, there have been concerns that the sector's growth is unsustainable. In October, Indiana consumer and environmental advocacy organization Citizens Action Coalition (CAC) called for a moratorium on new hyperscale data centers that power artificial intelligence.