Environmental and consumer groups want Louisiana officials to investigate how a new financing structure for Meta’s $27 billion artificial intelligence data center in the state’s northeast could impact electricity bills for residents. 

Meta can leave the data center after only four years, far shorter than the 15-year term approved in August by state regulators, the nonprofits say. The altered financing “significantly increases ratepayer risk,” according to a motion filed Wednesday with the Louisiana Public Service Commission on behalf of two nonprofit groups. 

“Meta is acknowledging tacitly I suppose that the buildout of this facility is risky,” said Logan Burke, who runs the Louisiana-based Alliance for Affordable Energy. 

Entergy, which is building the electricity plants for the data center, disputes the nonprofits’ claims.

The Public Service Commission, which regulates utilities, approved in August the plan to power Meta’s biggest-ever data center, a project that will need roughly three times the amount of electricity annually that New Orleans uses in a year. Meta CEO Mark Zuckerberg has separately spoken of further expanding the data center to a size that would rival the footprint of Manhattan, though some analysts have expressed doubt over whether that is possible. 

The controversial approval cleared the way for Entergy, the state’s largest utility, to begin constructing three gas-fired electricity plants and other infrastructure worth billions of dollars. Advocates and academics have also raised concern over the environmental risks of the new fossil fuel-powered gas plants and the water demands of the facility. 

On the day Louisiana regulators approved Meta’s power plan, the tech company “fundamentally altered” the financial setup of the Richland Parish data center, the nonprofits allege.

Under the complex financial model, Meta teamed up with a top private equity firm in a deal that helps the tech company offset financial risk and guarantees a profit for the private equity company, according to The Wall Street Journal. The restructuring essentially gives the private equity company majority ownership of the data center and makes Meta a tenant, able to exit the lease every four years for up to 20 years.

The term is a fraction of the 15-year contract that the Louisiana regulators approved, though that length also worried opponents. The three gas plants that Entergy is building have a lifespan of up to 40 years, the nonprofits argued over a monthslong approval process, potentially leaving ratepayers on the hook for some costs of the new infrastructure if the tech company leaves.

The nonprofit groups want the commission to investigate whether Meta or Entergy misled the state regulators, determine the effect of the new financial structure on ratepayers and review the timing of the financial rearrangement.

A spokesperson for Meta could not be reached for comment. 

Entergy disagrees

Brandon Scardigli, a spokesperson for Entergy, said the company strongly disagrees with the allegation that changes to the data center financing puts Entergy or its customers at risk. 

“That is simply false,” Scardigli said. 

The deal between Meta and Entergy is supported and backstopped by robust credit protections, Scardigli said, including a guarantee from the tech company that remains “in full force” regardless of changes to project financing. The company also maintains that the “suggestion that Entergy Louisiana somehow misled the commission is utterly without merit and false.” 

Entergy has previously stressed that the tech company will cover all revenue for the new plants throughout the 15-year deal, though all customers will pay for other related infrastructure costs. The plants will be able to serve everyone if Meta leaves after the 15-year deal as the utility retires older, less-efficient plants.

Part of the nonprofits’ concern is related to the creation of a new entity majority-owned by the private equity firm, Blue Owl, and partly owned by Meta. That new entity will now serve as the parent company of the subsidiary that entered into the electricity deal with Entergy. Meta itself had previously been the parent company of the subsidiary, which is called Laidley.

“There is no longer an enforceable parent guaranty since Meta is no longer the parent,” the nonprofits’ motion states. 

Concern from regulators

Public Service Commissioner Foster Campbell, whose district includes Richland Parish, said his staff is looking into the request. 

“We’re concerned about it, but we feel good that we have a financial backer in Entergy,” Campbell said.

Commissioner Davante Lewis, the sole regulator to vote against the original plan, said he’s been deeply concerned “since day one” over transparency issues impacting both the public and the state regulators. He said he planned to review the motion “and ensure that it has a public discussion.”