19119_Authority_April_2026

municipalauthorities.org │ 61 for homes and small businesses. You may need to update your rules to establish your authority to limit how much water one customer can use, permit your utility to reduce service during emergencies, address differences in wastewater quality, and require large customers to help manage demand. Relevant policies you may want to consider include: • A maximum service/allocation provision that sets limits on demand, requires monitoring infrastructure, and provides a disclaimer that water service is subject to availability and system conditions. • A water supply emergency/ drought response ordinance or rule that establishes priority tiers for who gets service first and makes it enforceable with penalties, flow restrictors, and service suspension. • Rules for High-Risk Dischargers and Non-Domestic Waste that limit certain pollutants or prohibit certain discharges, establish requirements for an industrial user permit, require certain infrastructure, and authorize cost recovery (such as special monitoring fees, treatment impact fees, surcharges, and reimbursement for compliance costs). • Standards for Large Customer Water Efficiency and Demand Management (requiring a water management plan, infrastructure installation, and uninterruptible service requirements to reduce demand under certain conditions). Keep it fair and defensible by classifying rules by general characteristics. (Don’t say this rule applies to data centers, say it applies to users with a specific volume or discharge quality.) Coordinate with your team to determine exactly what is needed before making any adjustments. This includes your engineer, solicitor, financial advisor, operations leaders, and pretreatment coordinator, if applicable. Engage external stakeholders, too, including your municipality and local economic development agencies Step 6 – Negotiate a fair service agreement. A written service agreement is a critical risk-management tool. A well-structured agreement should clearly define: • Infrastructure responsibilities and ownership. • Reserved capacity and maximum. • Rates, fees, cost-recovery mechanisms, and security instruments. • Emergency curtailment rights and priority of service. • Monitoring, reporting and data-sharing requirements. • Procedures for expansion, operational changes, or shutdown. Don’t just rely on a standard developer agreement; data centers have unique requirements and present unique risks. A well-written service agreement safeguards utility finances and guides operations. It benefits all parties by protecting ratepayers, preserving quality service, providing certainty to the developer, and supporting long- term sustainability. Pulling the Steps Together and Preparing. Taken together, these six steps form a disciplined approach to managing the technical, regulatory, and financial risks associated with data center development. Gathering accurate demand information, assessing capacity, planning capital investments, structuring cost recovery, reinforcing policies, and negotiating enforceable agreements are not isolated tasks; they are interconnected decisions that determine whether a utility can serve a data center without exposing existing customers to undue risk. Utilities that wait until a formal request is on the table often find themselves reacting under time pressure with limited leverage and incomplete information. Preparing in advance allows utilities to align internally, establish clear expectations, and engage developers from a position of technical and financial clarity. Utilities can take these respective measures to prepare now before a data center inquiry comes your way: Achieve internal alignment. Establish a shared position on data center service, decision making authority, and internal roles. Identify clear leads for technical review, financial analysis, and legal agreements so responsibilities are understood and responses are coordinated from the outset. Coordinate early with municipalities and economic development agencies. Understand whether data centers are a priority or a concern and align expectations accordingly. Help external stakeholders understand utility demands, capacity constraints, and financial impacts. Discuss incentives carefully, ensuring that