Lawmakers Push To Make Data Center Developers Pay For Grid Upgrades
The House of Representatives opened debate this week on legislation protecting consumers from rising energy costs from data center development, a bipartisan initiative that comes as two high-profile progressives push for an outright moratorium on new construction.
The House Committee on Energy and Commerce energy subcommittee on Wednesday took up debate on the Ratepayer Protection Act, which would require data center developers to pay for power grid upgrades needed to support their projects.
The bill is Congress’ attempts to codify the Ratepayer Protection Pledge, which was rolled out by the White House in March and has the backing of major tech giants including Google, Microsoft, Meta, Oracle, xAI, OpenAI and Amazon.
The bill is sponsored by Reps. Gabe Evans, a Colorado Republican, and Kathy Castor, a Democrat from Florida. It’s also backed by Republican Rep. Bob Latta of Ohio, who chairs the energy subcommittee, and Energy and Commerce Committee Chairman Rep. Brett Guthrie, a Kentucky Republican.
Winning the race for global artificial intelligence dominance is crucial but should not come at the cost of taxpayers, Guthrie said in a statement this month.
“Families and small businesses across the country shouldn’t be left to foot the bill for this new development, though the benefits of these innovations will be felt by all of society,” he said.
The debate comes as analysts at Moody's Ratings warn that the need to rapidly build infrastructure to support AI’s integration into daily life raises new credit risks for state and local governments.
“New data center development may fail to deliver material revenue benefits if tax policies are not well calibrated,” the analysts said. Tax breaks and other incentive programs can erode near-term revenue gains, and “the long-term economic benefit from data centers has typically been modest.”
Local municipalities are creating a patchwork of rules, and local moratoriums in some areas are likely to push projects into shovel-ready locations, the analysts wrote.
Despite the wide variance in regulations and reception from different communities — local opposition to development has ballooned since the start of the year — the cost of power, strong internet connectivity and exposure to natural disasters are still the key drivers of development decisions.
The U.S. Department of Energy is looking to finance 10 nuclear reactors across five sites, U.S. Energy Secretary Chris Wright said at a Bisnow event in May, which would relieve some of the energy production pressures from localities.
Communities across the country are balking at rising energy costs associated with new data center development, and the two highest-profile progressives in Congress are pushing for the government to temporarily stop all data center construction.
New York Rep. Alexandria Ocasio-Cortez on Wednesday introduced the Artificial Intelligence Data Center Moratorium Act to the House as the partner bill to Sen. Bernie Sanders’ version in the upper chamber.
The bill would immediately halt all new data center construction and introduce strong consumer protections for ratepayers. The moratorium would stay in effect until “strong national safeguards” are in place and Congress passes legislation rescinding the ban.
Sanders referred the bill to the Senate Committee on Commerce, Science, and Transportation in March, but the committee hasn’t brought the legislation up for debate.
