This is Part III of The Utility-AI Leadership Edge, a four-part series on how utility leaders can use AI to improve resilience, reliability, and growth. Parts I and II covered the COO and CIO mandates; Part III turns to the CFO’s role in funding AI-driven grid growth while protecting affordability and fair cost allocation. Part IV will examine the CEO’s role in aligning the enterprise for transformation.
For much of the past century, the utility CFO’s job was relatively predictable. Demand growth was steady, capital planning followed well-established patterns, and rate cases were largely built around replacing aging infrastructure, maintaining reliability, and generating reasonable shareholder returns. The financial challenge was one of optimization rather than transformation. That era is ending, and the change is arriving faster than many utility planning cycles were designed to absorb.
Today, utility CFOs are standing at the center of one of the largest infrastructure investment cycles in modern history. Electrification is accelerating, manufacturing is reshoring, artificial intelligence is driving an unprecedented wave of hyperscale data center development, distributed energy resources are reshaping grid architecture, and extreme weather events are increasing resilience requirements.
At the same time, regulators, legislators, and customers remain intensely focused on affordability. The result is a fundamental shift in the CFO mandate: the challenge is no longer simply raising capital, but raising capital at unprecedented scale while ensuring that residential and small commercial customers do not become the unintended financiers of growth driven by a relatively small number of large-load customers.
The utilities that succeed over the next decade will not be those that spend the most. They will be those that fund growth most intelligently, with a clear line of sight between capital deployed, customers served, risks allocated, and outcomes delivered.
The Scale of the Challenge Has Changed
Across North America, utilities are receiving load requests that would have been unimaginable just a few years ago. Single data center campuses now routinely seek hundreds of megawatts of capacity, and in some regions utilities are evaluating gigawatt-scale requests from clusters of hyperscale operators, AI computing facilities, advanced manufacturing plants, and electrification projects.
Historically, large industrial loads represented meaningful but manageable additions to the system. Today’s requests often rival the demand of entire cities, and they arrive in concentrated geographies where the grid may already be constrained by transformer availability, interconnection backlogs, limited transmission capacity, workforce limitations, or local permitting friction.
The traditional utility finance model assumes that infrastructure investments are broadly beneficial across the customer base over long periods of time. Large-load growth challenges that assumption because the costs can be immediate, location-specific, and driven by the requirements of one customer or a small group of customers.
When a utility must invest hundreds of millions of dollars in substations, transmission upgrades, transformers, switchgear, and distribution infrastructure to serve a specific load pocket, the critical question is no longer theoretical. The question is who should pay, and the answer will increasingly define the quality of utility regulatory relationships over the next decade.
The scale of the issue is now visible in national data. The U.S. Department of Energy reported that data centers consumed roughly 4.4 percent of total U.S. electricity in 2023 and could consume between 6.7 and 12 percent by 2028, while total data center electricity use rose from 58 TWh in 2014 to 176 TWh in 2023.¹
That growth is not occurring in a vacuum. The Energy Information Administration projects that U.S. electricity consumption will reach record highs in 2026 and 2027, with commercial electricity consumption surpassing residential consumption for the first time on record in 2026.²
For CFOs, this means load growth is no longer simply a sales opportunity or a capital plan input. It is a commercial, operational, regulatory, and customer trust challenge that has to be managed with discipline from the first interconnection conversation.
The Affordability Imperative
Utility leaders understand that economic development matters. Data centers create jobs, attract investment, and support broader regional growth, while manufacturing expansion strengthens local economies and electrification supports public policy objectives and long-term sustainability goals.
Yet residential customers are increasingly concerned about affordability. Electricity bills have become more visible, more political, and more contested at the same time that utilities are asking regulators to approve large capital plans for generation, transmission, distribution modernization, resilience, and grid hardening.
Many regulators are asking difficult but necessary questions. Should residential customers absorb infrastructure costs required to serve large hyperscale facilities, should small businesses subsidize grid upgrades primarily benefiting a handful of large-load customers, and how should utilities allocate risk when future demand forecasts remain uncertain?
These are not merely regulatory questions. They are financial strategy questions, and the CFO must become the architect of equitable cost allocation models that encourage growth while protecting customer trust.
That trust is already being tested. The Wall Street Journal has reported on the growing dispute between utilities and technology companies over who should pay for the power infrastructure required by the data center buildout, while the Washington Post has highlighted concerns that residential customers are seeing bills rise even as large-load customers may benefit from negotiated structures or direct access to high-voltage infrastructure.³
The concern is not that utilities are building for growth. The concern is that customers may come to believe they are paying for someone else’s growth without receiving a clear, measurable, and fairly allocated benefit.
This is where the CFO’s role becomes more than financial stewardship. It becomes customer stewardship, because affordability is not only a rate case issue; it is the foundation of permission to build.
The Growing Importance of CIAC
One of the most powerful tools available to utilities is Contributions in Aid of Construction, commonly known as CIAC. Historically, CIAC has been used to require customers to fund portions of infrastructure that primarily benefit their own service requirements.
While not new, its importance is increasing dramatically as utilities evaluate massive load requests. In a world of gigawatt-scale interconnections, CIAC becomes a practical mechanism for balancing growth and fairness.
Rather than placing all upgrade costs into rate base, utilities can require large customers to contribute toward dedicated infrastructure investments. This may include new substations, feeder expansions, transmission upgrades, switching equipment, interconnection facilities, and other assets required primarily to serve the customer’s load.
Properly structured CIAC arrangements can achieve multiple objectives simultaneously. They protect residential customers from bearing disproportionate costs, create clearer economic signals for large-load developers, reduce stranded asset risk if projects fail to materialize, and improve regulatory support by demonstrating prudent stewardship of customer dollars.
The most effective CFOs are no longer viewing CIAC as a transactional tool. They are treating it as a strategic instrument within broader infrastructure financing frameworks, especially where load requests are large, concentrated, uncertain, or tied to customers whose business models may evolve faster than utility assets depreciate.
This matters because AI infrastructure forecasts remain highly uncertain. The International Energy Agency projects that global data center electricity consumption could roughly double by 2030 in its base case, but it also emphasizes that outcomes depend heavily on AI adoption, hardware efficiency, software efficiency, deployment constraints, and energy-sector bottlenecks.⁴
For utility finance, uncertainty does not justify inaction. It justifies better risk allocation, clearer commercial terms, and stronger alignment between the customer creating the need and the customer paying for the solution.
Beyond Traditional Rate Base Funding
The magnitude of investment required over the next decade means utilities cannot rely solely on traditional financing approaches. Rate base investment will remain central, but it cannot become the default answer for every infrastructure need created by every large-load customer.
CFOs are increasingly exploring diversified funding strategies that preserve balance sheet strength while accelerating infrastructure deployment. These strategies include CIAC, direct assignment of dedicated facilities, minimum demand commitments, collateral requirements, exit fees, long-term service agreements, public-private partnerships, federal funding, state economic development support, and customer-backed infrastructure contributions.
One opportunity lies in economic development partnerships. State and local governments often have strong incentives to attract major investments and may contribute funding for enabling infrastructure when the broader economic benefits are clear.
Federal programs also remain relevant as policymakers recognize the importance of grid modernization, resilience, domestic manufacturing, and energy security. Grants, tax incentives, loan programs, and public-private partnerships can significantly reduce the amount of capital ultimately recovered through rates.
Utilities are also beginning to explore infrastructure partnerships with large-load customers themselves. Rather than viewing customers solely as ratepayers, some organizations are creating collaborative investment structures where risks and benefits are shared more directly.
This shift reflects a broader reality. The grid is increasingly becoming a platform for economic growth, and platform investments often require platform financing models. For CFOs, the opportunity is not only to find more capital. It is to design financing structures that make growth durable, fair, and executable across engineering, operations, commercial teams, regulators, and customers.
Large-Load Tariffs Are Becoming a Core CFO Tool
Large-load tariffs are quickly becoming one of the most important regulatory tools in the utility finance toolkit. In 2025, state regulators approved 29 large-load tariffs, and additional tariffs have continued to emerge as utilities and commissions respond to the scale of data center and advanced manufacturing demand.⁵
This trend is significant because large-load tariffs are not simply pricing mechanisms. They are risk-allocation frameworks that can help determine how infrastructure costs, demand uncertainty, and customer-specific grid impacts are handled before capital is deployed.
The strongest tariffs include minimum contract terms, minimum bills, collateral requirements, demand ramp schedules, exit provisions, curtailment or flexibility provisions, and direct assignment of upgrade costs where appropriate. These elements matter because they help ensure that existing customers are not left paying for infrastructure built around speculative or delayed projects.
The weaker versions create a new customer class without solving the underlying problem. A tariff that does not address stranded asset risk, timing uncertainty, or cost causation may offer the appearance of fairness while still leaving residential and small commercial customers exposed.
For CFOs, tariff design should therefore be treated as a capital markets issue as much as a regulatory issue. Investors, rating agencies, regulators, and customers will increasingly want to know how much of a utility’s capital plan depends on large-load growth and what protections exist if that load does not arrive as forecast.
Good tariff design also requires commercial discipline. Sales, engineering, operations, regulatory, and finance teams have to show up together with a shared understanding of what the customer needs, what the system can support, what risks are being created, and what commitments are required before the utility builds.
AI Creates Both Demand and Opportunity
Artificial intelligence is creating one of the largest load growth opportunities in utility history. At the same time, AI can help CFOs manage the financial consequences of that growth.
Historically, infrastructure planning often relied upon deterministic forecasts and long planning cycles. Today’s environment requires far greater adaptability because customer development pipelines, technology requirements, chip efficiency, energy intensity, generation availability, and interconnection timelines are all moving at once.
Advanced forecasting tools can improve load growth predictions by incorporating customer development pipelines, regional economic indicators, weather patterns, distributed energy resources, electrification trends, market signals, and known infrastructure constraints. Digital twins and scenario modeling can help CFOs evaluate multiple investment pathways before committing capital.
AI-driven planning can also identify opportunities to defer investments through operational optimization, distributed energy resources, demand response programs, flexible load management, storage, and non-wires alternatives. In many cases, the lowest-cost infrastructure investment is the one that never has to be built.
This does not eliminate the need for capital deployment. It improves capital efficiency, and for CFOs managing billions of dollars in future investment decisions, that distinction matters enormously.
The same point is emerging in the broader AI and energy conversation. AIxEnergy’s recent analysis has emphasized that the next bottleneck is not just power availability, but proof: institutions need to verify what their models claim before using them to guide consequential infrastructure decisions.⁶
For utilities, that principle is especially important. Forecasts must become more transparent, assumptions must become more auditable, and capital plans must be supported by evidence that regulators and customers can understand.
The real value of AI is not that it makes planning sound more sophisticated. The real value is that it can help utilities make better decisions earlier, reduce avoidable spend, improve customer outcomes, and strengthen the operating rhythm between the field, the control room, the finance organization, and the executive team.
Flexibility Should Be Treated as a Financial Asset
The most underpriced resource in utility finance is flexibility. Utilities have traditionally treated demand as something to be served, but the next phase of grid modernization requires demand to become something that can also be shaped.
This is especially relevant for data centers. Not all computing workloads are equally time-sensitive, and some AI training, batch processing, and non-latency-critical workloads can shift in time, reduce consumption during peak events, or respond to grid signals without undermining service quality.
Research and field demonstrations are beginning to show what this could mean in practice. A 2025 field demonstration in Phoenix found that software-based orchestration of AI workloads reduced cluster power usage by 25 percent for three hours during peak grid events while maintaining quality-of-service guarantees.⁷
For CFOs, this changes the investment equation. A flexible 500 MW customer is not financially equivalent to an inflexible 500 MW customer, because flexibility can reduce peak capacity requirements, defer network upgrades, improve asset utilization, and lower the cost of serving load.
Tariffs and contracts should reflect that distinction. Large-load customers should contribute appropriately toward the infrastructure they require, but they should also be able to earn credit for verifiable grid value when they provide flexibility, storage, controllable demand, clean capacity, or other system benefits.
This is the next step beyond cost allocation. The mature framework is cost causation plus grid value creation, with measurement and verification strong enough to stand up in front of customers, regulators, and investors.
Protecting Residential and Small Commercial Customers
Perhaps the most important responsibility facing utility CFOs is preserving trust. Customers generally support economic growth, reliability improvements, and investments that strengthen communities.
What they do not support is the perception that they are paying for someone else’s growth. That perception can quickly turn necessary grid investment into a legitimacy problem, especially when household budgets are already under pressure.
Utilities must therefore establish transparent frameworks that clearly connect costs to beneficiaries. This requires thoughtful rate design, rigorous cost allocation methodologies, proactive stakeholder engagement, and clear documentation of when a proposed investment creates broad system value rather than narrow customer-specific value.
Large-load customers should contribute appropriately toward infrastructure requirements they create. Risk-sharing mechanisms should protect existing customers from speculative development activity, and regulators should receive clear evidence demonstrating that infrastructure investments generate broad system benefits before costs are socialized.
Most importantly, CFOs must communicate these principles consistently and transparently. Affordability is not merely a regulatory requirement; it is a strategic asset.
Utilities that maintain customer trust will find it easier to secure regulatory support, attract investment capital, and pursue long-term growth opportunities. Utilities that lose that trust will find that even technically sound capital plans become harder to approve, finance, and execute.
Customer trust is also built through execution. Utilities have to deliver what they promise, explain what they are doing, and show that growth is being managed with the same discipline they expect from their best industrial and commercial customers.
The Emerging CFO Playbook
The utility CFO of the future will look different from the CFO of the past. Financial stewardship remains essential, but it is no longer sufficient.
Tomorrow’s CFO must understand grid architecture, load forecasting, distributed energy resources, regulatory strategy, economic development, AI-enabled planning, customer affordability, and capital market expectations. They must become translators between investors seeking growth, regulators seeking fairness, operators seeking reliability, and customers seeking affordability.
The first priority is to build a beneficiary-based capital framework. Every major investment should be mapped by who benefits, who creates the need, who bears the risk, and whether the investment produces broad system value or primarily customer-specific value.
The second priority is to treat CIAC as strategy rather than administration. CIAC should be integrated into large-load policy, interconnection review, collateral requirements, and capital planning before engineering decisions are effectively locked in.
The third priority is to use large-load tariffs to price risk honestly. Minimum bills, long-term contracts, demand commitments, ramp schedules, exit fees, and security requirements should become standard tools for high-impact load additions.
The fourth priority is to require proof before socialization. Before costs are moved into rate base, utilities should demonstrate credible load certainty, broad system benefit, and alternatives analysis that includes non-wires options and flexibility.
The fifth priority is to integrate AI into finance and planning in practical ways. AI should improve forecasting, scenario analysis, asset utilization, outage prediction, interconnection screening, and capital prioritization, not simply add another layer of complexity to already difficult planning processes.
The sixth priority is to build cross-functional operating discipline around large-load growth. Finance, commercial, engineering, operations, regulatory, supply chain, and customer teams need a shared process for evaluating projects, pricing risk, setting expectations, and moving from opportunity to execution without losing accountability.
Most importantly, CFOs must recognize that the challenge is not choosing between growth and affordability. The challenge is designing financial structures that enable both.
A Defining Decade
The utility industry is entering a defining decade. Few periods in modern utility history have presented this level of opportunity, and few have carried this level of responsibility.
The investments made over the next ten years will shape economic development, grid reliability, customer affordability, and national competitiveness for generations. Utilities will need to build more infrastructure, but they will also need to build smarter financing models.
They will leverage tools such as CIAC, public-private partnerships, advanced forecasting, AI-driven planning, large-load tariffs, flexible load programs, and innovative capital structures to ensure that growth remains sustainable. They will also need to demonstrate that the benefits and risks of this growth are being allocated fairly.
A utility’s most valuable asset is not its transmission system, its substations, or its generation portfolio. Its most valuable asset is the trust of the customers and communities it serves. The CFO’s job is to protect that trust while funding the future. That is the new mandate, and it will define the next era of utility leadership.
Notes
- U.S. Department of Energy, “DOE Releases New Report Evaluating Increase in Electricity Demand from Data Centers,” December 20, 2024. The DOE summary reports that U.S. data center electricity use rose from 58 TWh in 2014 to 176 TWh in 2023 and could reach 325–580 TWh by 2028. (The Department of Energy's Energy.gov)
- Reuters, “US Power Use to Beat Record Highs in 2026 and 2027 as AI Use Surges, EIA Says,” June 9, 2026. The report cites EIA projections that U.S. power consumption will reach 4,271 billion kWh in 2026 and 4,397 billion kWh in 2027. (Reuters)
- Wall Street Journal, “Who Pays? AI Boom Sparks Fight Over Soaring Power Costs,” July 29, 2025; Washington Post, “Why Your Power Bill Is Spiking Faster Than a Nearby Data Center’s,” January 15, 2026. (Wall Street Journal)
- International Energy Agency, “Energy Demand from AI,” in Energy and AI, accessed June 15, 2026. The IEA projects that global data center electricity consumption could reach roughly 945 TWh by 2030 in its base case. (IEA)
- Meris Lutz, “Large Load Tariffs Proliferate as States Take More Active Role in Data Center Regulation,” Utility Dive, March 31, 2026. The article reports that state regulators approved 29 large-load tariffs in 2025. (Utility Dive)
- AIxEnergy, “This Week,” accessed June 15, 2026. The tag page includes “The Grid’s Next Bottleneck Is Proof,” “The Pause Button,” and related AI-and-grid analyses published in June 2026. (AIxEnergy)
- Philip Colangelo et al., “Turning AI Data Centers into Grid-Interactive Assets: Results from a Field Demonstration in Phoenix, Arizona,” arXiv, July 2025. The paper reports a 25 percent reduction in cluster power usage for three hours during peak grid events while maintaining quality-of-service guarantees. (arXiv)
