Technology

Senators Want To Make AI Data Centers Pay For The Grid Upgrades Driving Up Your Electric Bill

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A bipartisan Senate bill would require artificial intelligence data centers to pay for the grid upgrades they need instead of passing the costs to families.

The data center measures, part of the broader Bipartisan American Affordability and Jobs Act unveiled Sept. 30, would go much further than the mostly voluntary steps Washington has taken so far, Axios reported Thursday. The bill would require data centers to cover all transmission costs linked to them, keeping those costs off the bills of households and businesses, The Associated Press reported.

Republican West Virginia Sen. Shelley Moore Capito, Republican Utah Sen. Mike Lee, Democratic New Mexico Sen. Martin Heinrich and Democratic Rhode Island Sen. Sheldon Whitehouse — who are the lead members from their respective parties on the Senate’s energy and environment committees — negotiated the bill.

Heinrich said when the bill was unveiled that it “will mean more energy on the grid, more good-paying jobs, and lower electricity costs for families and businesses,” according to the AP. “And as data centers drive demand for more power, it will ensure they pay their fair share of the grid upgrades they require — not leave that bill to American families.”

Whitehouse wrote on X Sunday that under the bill, data centers “must pay for any network upgrades needed to serve their big demand, so ratepayers don’t bear the cost burden of added infrastructure.”

New data centers of at least 20 megawatts would have to cover the added costs they put on the power system, including generation, storage, transmission and distribution, according to Axios. Federal and state regulators could also charge large data centers more than those costs and use the extra money to lower other customers’ bills.

Utilities would have to secure financial guarantees before building data center infrastructure, and the facilities would remain responsible for those costs even if they stop buying power before recovering them, the outlet reported.

The offices of Capito, Lee, Heinrich and Whitehouse and the Data Center Coalition each did not immediately respond to the Daily Caller News Foundation’s requests for comment.

States would get wide latitude to go further, including treating data centers less favorably than other large industrial customers and requiring them to secure new power supplies or accept limits on their electricity use, according to the outlet. More than half the states already have policies in place or pending that require data centers to pay more of what it costs to serve them, according to Axios.

“I don’t think we’ve seen it before,” Ari Peskoe, director of the Electricity Law Initiative at Harvard Law School, told the outlet of the proposed costs and restrictions on data centers.

“I don’t think we’ve seen growth that’s comparable to data centers today,” Peskoe added.

“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 White House official under President Joe Biden and now a senior fellow at the nonprofit Searchlight Institute, told the outlet.

Travis Fisher, a former Trump White House energy official now at the Cato Institute, told Axios he has “mild support” for the approach and said the provisions “break new ground” at the Federal Energy Regulatory Commission.

The bill would also speed approvals for the power plants and transmission lines data centers need, so it cuts both ways for tech companies, according to Axios.

The bill “could unlock the investment needed to build new generation and transmission faster,” Craig Sundstrom, Amazon’s energy policy director, told the outlet. Microsoft, Google and Nvidia declined to comment to Axios, and Meta did not respond.

An unnamed tech industry official told the outlet that some provisions amount to an “unprecedented level of discriminatory treatment” for a single industry and warned that tougher rules for connecting to the grid could push some developers to build power supplies entirely off the grid.

“America has had a permitting system filled with delays, expenses, red tape, uncertainty,” Capito said when the bill was unveiled, according to the AP.

Drew Maloney, president and CEO of the Edison Electric Institute, which represents investor-owned utilities, said his group was reviewing how the transmission provisions would affect its effort to serve 250 million customers, according to the AP.

A vote on the bill will not happen until after the midterm elections, and Lee said he is confident the Senate will pass it in a lame-duck session in November, the AP reported.