“Just to be candid, having some teeth on data center accountability and ratepayer protection is just table stakes to getting a deal done.” Jane Flegal, a former Biden White House official now at the Searchlight Institute, told Axios that about a bipartisan Senate energy bill.
The bill, part of the Bipartisan American Affordability and Jobs Act unveiled Sept. 30, would make AI data centers pay for the grid upgrades they need instead of passing the cost to families. Four senators negotiated it: Republicans Shelley Moore Capito of West Virginia and Mike Lee of Utah, and Democrats Martin Heinrich of New Mexico and Sheldon Whitehouse of Rhode Island. They are the lead members of their parties on the Senate’s energy and environment committees.
What the bill requires
New data centers of at least 20 megawatts would cover the added costs they put on generation, storage, transmission and distribution, Axios reported. Federal and state regulators could charge large data centers more than those costs and use the surplus to lower other customers’ bills.
Utilities would need financial guarantees before building infrastructure for a data center. The facility would stay on the hook even if it stopped buying power before the utility recovered its costs.
States could go further. They could treat data centers less favorably than other big industrial customers, or require them to line up new power supplies or accept limits on their electricity use. According to Axios, more than half the states already have such policies in place or pending.
The bill also speeds approvals for the power plants and transmission lines data centers rely on.
Heinrich said the bill will ensure data centers “pay their fair share of the grid upgrades they require,” rather than leave that bill to American families. Whitehouse wrote on X that data centers “must pay for any network upgrades needed to serve their big demand.”
Industry and expert reaction
Ari Peskoe, who directs the Electricity Law Initiative at Harvard Law School, said he did not think “we’ve seen it before,” and added that data center growth has no comparable precedent.
Travis Fisher of the Cato Institute, a former Trump White House energy official, voiced “mild support” and said the provisions “break new ground” at the Federal Energy Regulatory Commission.
Tech companies are split. Amazon’s energy policy director, Craig Sundstrom, said the bill “could unlock the investment needed to build new generation and transmission faster.” Microsoft, Google and Nvidia declined to comment, and Meta did not respond. An unnamed industry official called some provisions an “unprecedented level of discriminatory treatment” for one industry and warned that tougher grid-connection rules could push some developers to build power supplies off the grid entirely.
Drew Maloney, head of the Edison Electric Institute, which represents investor-owned utilities, said his group was reviewing how the transmission provisions would affect its work serving 250 million customers.
No vote will happen until after the midterm elections. Lee said he is confident the Senate will pass the bill in a lame-duck session in November.
Sources
- Senate energy bill would make data centers pay more for grid upgrades
- Big Tech Could Be Forced To Foot The Bill For The Power Lines Its AI Needs
