Are GenCos a solve for the data center power problem?

A new utility structure called a "GenCo" is being tested as a way to power data centers without putting the cost on regular electric customers. Here's how it works: a utility sets up a separate subsidiary to build and own power plants dedicated to a specific data center, then sells that electricity to the parent utility through a contract, which resells it to the data center. Because the subsidiary isn't the utility itself, its costs and risks stay off the books that determine your electric rates.

The first example is NIPSCO, a utility in Indiana, which got approval in September 2025 to create a generation subsidiary for large power users like Amazon and Alphabet's data centers. The process moved fast — a contract with Amazon was approved in about seven months, and a major power plant project (two large gas plants and a battery) got approved in under five months, far quicker than normal utility reviews. NiSource, NIPSCO's parent, says the deals could save residential customers over $1 billion. Other utilities, including FirstEnergy in West Virginia, are now considering the same approach.

The structure isn't without concerns. Data centers still rely on the shared power grid — the poles and wires — so questions remain about who pays for that shared infrastructure. There are also worries about transparency, since these are individually negotiated contracts, and about what happens if a data center project falls through after a plant is built. Analysts say the model only works if the new subsidiary is kept financially separate from the main utility, with its own approvals for each deal. For homeowners, this is mostly background on how utilities are handling the surge in data center demand, rather than something requiring any action right now.