
As large electric loads drive a new wave of demand, utilities and regulators are rethinking how credit and collateral policies should keep pace. Many existing approaches were designed for a different era and no longer reflect the profile of today’s large loads. Utilities and their regulators must manage legitimate risks like stranded assets, but current practices may be based on legacy, non-holistic frameworks that can lead to inefficient outcomes.
A new white paper from E3, sponsored by the Data Center Coalition, presents a modern, principles-based framework for credit and collateral policy. The framework focuses on distinguishing between perceived versus actual risk and promotes a balanced, adaptable approach that can manage risk effectively without deterring investment. The following figure illustrates the project milestones and risk profile of a customer’s new large load project from both the perspective of the utility and the customer.

The paper offers actionable recommendations for key stakeholders:
- Utilities should align collateral requirements to project risk milestones, accept a range of pre-vetted forms of collateral, and avoid redundant risk protections.
- Regulators should ensure utility policies are fair, non-discriminatory, and justified based on quantifiable utility exposure, leveraging pilot programs to innovate.
- Large loads can foster more effective outcomes through proactive, open and collaborative engagement with utilities.
The paper also presents a novel framework called the “Credit Efficiency Index” that can be a guide in developing a holistic, transparent, and scalable method to assess risk and determine credit requirements.
In today’s rapidly changing landscape, credit and collateral policy should evolve to more effectively protect ratepayers while enabling growth. More broadly, credit and collateral policy can serve as a case study in how utilities, regulators, and large loads can approach shared risk and manage it through collaborative, balanced and effective solutions.
Download the paper >
For more information on E3’s work with data centers and other large energy service users, please contact kushal.patel@ethree.com.