NEW YORK, Nov 1 (Reuters) - Costs and reliability

concerns related to the burgeoning trend of building

energy-intensive data centers on the sites of U.S. power plants

were the focus of a technical conference held on Friday by the

Federal Energy Regulatory Commission.

As the technology industry races to deploy data centers

needed to roll out technologies like generative artificial

intelligence, quickly accessing the massive amounts of

electricity needed for the centers has become a critical

problem.

Connecting data centers directly to power plants, in an

arrangement known as co-location, has presented a fast way to

access large amounts of electricity, instead of toiling for

years in queues to connect to the broader grid.

"I believe that the federal government, including this

agency, should be doing the very best it can to nurture and

foster their development," said FERC Chairman Willie Phillips,

adding that he considered the AI centers were vital to national

security and the country's economy.

The arrangements have sparked concerns that the co-located

centers will increase power bills for everyday customers by

using grid infrastructure and services paid for by the public.

Co-located data centers have also raised reliability questions,

in part, by diverting steady power from the grid or potentially

sucking electricity from the system if the neighboring power

plant goes down.

"Does the customer get to still draw power from the grid?

Because if it does, that's going to have a huge impact," said

Commissioner Mark Christie.

The technical conference could lead to new guidelines for

who is responsible for certain costs related to co-located data

centers and how the centers are governed.

FERC is also currently gathering details on a regulatory

battle being waged by electric utilities over a co-located

Amazon data center at a Talen Energy ( TLN ) nuclear power plant in

Pennsylvania. Talen's interconnection agreement for the center

is being opposed by utilities Exelon ( EXC ) and American Electric

power ( AEP ), and FERC's decision could set a precedent for similar

deals.