It's not just about using the excess generation capacity. In fact, at this scale it probably has nothing to do with generation. For distribution utilities, they need to install new infrastructure to connect new large loads (new datacenter, new manufacturing plant, etc.) - substation upgrades, new conductor, etc. Because that infrastructure only serves that one customer, the cost is recovered from them through a minimum-connected-load + capital contribution contract rather than from the entire customer base through a rate increase.
Keep in mind that utilities are heavily regulated and can't typically touch their rates at all without regulatory approval. In many jurisdictions, there is an "obligation to connect" for residences - the utility /must/ provide power, at a certain rate, to any residence in their area of operation. They aren't allowed to directly recover the cost of infrastructure upgrades (e.g. new distribution transformer when somebody builds an expansion to their house) directly from that customer (up to a point - if you're building a mansion that uses 10x as much power as everyone else, they'll come after you), only from the ratebase as a whole. Otherwise, people who live in rural areas wouldn't be able to afford electricity.
No such obligation exists for businesses which are typically the largest loads anyhow. If you build a new 50 MW datacenter on my distribution system, now all of a sudden I need to put in 5km x 3 phases x 5 feeders of new conductor, 2 new station transformers, plus civil infrastructure, etc. It could even be special equipment I wouldn't otherwise have on my system - like DC equipment. All of that is additional to what I have to pay the generator for that 50 MW of power on a continuous basis. So, I calculate the payback period on 50 MW of power I'm going to sell you at a 5% margin, and if it's longer than the lifespan of the equipment I'm going to buy I make you pay up front to bring it down to say, 25 years. But that only works if you actually buy 50 MW of power from me for 25 years, so if you don't I charge you a penalty equivalent to the amortized cost of that infrastructure that now sits idle.
Hope this helps explain the economics of it from a distribution point of view. I am a power engineer.
Here in Toronto the current standard for residential service is 200 A @ 120/240V (24 kW). Older homes might be 100 A. That would be the max that the conductor between the distribution transformer and the home's panel can handle without thermal failure. But you wouldn't size distribution transforms based solely on peak load because a mineral-oil immersed transformer has a lot more thermal mass than a cable and takes hours/days of sustained load to actually heat up. Average loads used for planning and distribution transformer sizing are more like 5-10kW/house.
Keep in mind that utilities are heavily regulated and can't typically touch their rates at all without regulatory approval. In many jurisdictions, there is an "obligation to connect" for residences - the utility /must/ provide power, at a certain rate, to any residence in their area of operation. They aren't allowed to directly recover the cost of infrastructure upgrades (e.g. new distribution transformer when somebody builds an expansion to their house) directly from that customer (up to a point - if you're building a mansion that uses 10x as much power as everyone else, they'll come after you), only from the ratebase as a whole. Otherwise, people who live in rural areas wouldn't be able to afford electricity.
No such obligation exists for businesses which are typically the largest loads anyhow. If you build a new 50 MW datacenter on my distribution system, now all of a sudden I need to put in 5km x 3 phases x 5 feeders of new conductor, 2 new station transformers, plus civil infrastructure, etc. It could even be special equipment I wouldn't otherwise have on my system - like DC equipment. All of that is additional to what I have to pay the generator for that 50 MW of power on a continuous basis. So, I calculate the payback period on 50 MW of power I'm going to sell you at a 5% margin, and if it's longer than the lifespan of the equipment I'm going to buy I make you pay up front to bring it down to say, 25 years. But that only works if you actually buy 50 MW of power from me for 25 years, so if you don't I charge you a penalty equivalent to the amortized cost of that infrastructure that now sits idle.
Hope this helps explain the economics of it from a distribution point of view. I am a power engineer.