Do data centers need a ‘national strategy that puts communities first’?

The U.S. House of Representatives took a big step last week toward addressing the impacts of data centers on communities, but lawmakers say much more must be done.

Representatives passed the Ratepayer Protection Act by an overwhelming majority last week before leaving Washington to campaign for the midterm elections. That bill, which faces an uncertain future in the Senate, would require state public utility commissions to consider forming a strategy for large data center operators to pay for their own power, rather than pass costs onto consumers.

The bill would amend a section of the Public Utility Regulatory Policies Act to require regulators to establish a large-load standard, which is defined as non-residential customers that request electric energy for one or more facilities with a peak demand of 100 megawatts or more. That standard would provide that any large-load customer would cover the full, incremental cost of any generation, transmission or distribution upgrades and provide financial assurances to cover such upgrades.

“Across the country, communities are seeing proposals for new data centers that will bring jobs, investment and new technological capabilities, but also raise important questions about how these facilities will affect local electric grids and the nearby communities,” Rep. Bob Latta, an Ohio Republican who chairs the Energy Subcommittee on the House Energy and Commerce Committee, said in a statement. “One question should have a clear answer: American families should not have to pay higher electricity bills so large technology companies can build and operate data centers.”

Few things have caught the public and lawmakers’ attention like data centers, with proponents arguing they are necessary infrastructure to support the growth of artificial intelligence, while opponents are concerned about their impacts on local communities, including on power and water supplies. Recent polling has shown that data centers are Americans’ least favorite development, and in a bid to try to respond to this public outcry, state and local governments of various sizes have implemented moratoriums on their construction.

This bill, which is the first major piece of legislation to be passed in Congress on data centers, received plenty of praise from government groups. Matt Chase, CEO and executive director of the National Association of Counties, said the measure provides “greater certainty and transparency to counties and ratepayers about the costs associated with increased energy needs.”

“The rapidly expanding data center industry presents significant challenges to counties from rising power and water demands, complex land use challenges, and evolving tax implications,” Chase said in a statement released by the House Energy and Commerce Committee. “The Ratepayer Protection Act reinforces that while grid investments and infrastructure upgrades are necessary to meet rising energy demands, the financial burden should not fall on counties or individual ratepayers.”

But other elected officials said much more work lies ahead to ensure that the growth of AI and the development of data centers to support the technology does not negatively impact local communities. Rep. Suhas Subramanyam, a Virginia Democrat, said deciding where to site data centers needs more thought.

“This ad hoc approach — going community to community, county to county, state to state — is not really working right now,” Subramanyam said during an event hosted by the Brookings Institution in Washington, D.C. “It's all short-term profit-driven, sometimes it's a little predatory, and it's not working. I want more of a national strategy that puts communities first, and if you're going to need to build all these data centers, do it in a way that's sensible.”

Subramanyam also called for more transparency, both in the development agreements struck with localities, which often include elected officials signing nondisclosure agreements, as well as on resource usage. There has to be more “transparency and accountability,” he said.

“The way we measure the power impact and water impact right now is not logical to me,” Subramanyam said. “It's like measuring a football team by the size of their players and not by the actual score or their record. We're measuring their potential or their efficiency, but not necessarily what their actual power impact is. Then you end up getting into a place where you need more power than you thought you would, and the impact communities thought they were signing up for ends up being far more.”

Some others said the legislation is nowhere close to what is needed to prevent local communities from being damaged by the growth of data centers.

“This bill is a tiny step forward, but it falls far short of protecting communities, our water and our air from Big Tech’s greed,” Camden Weber, senior climate and energy policy specialist at the nonprofit Center for Biological Diversity, said in an email. “Congress is punting the hard work to the states, encouraging them to help ratepayers rather than implementing real safeguards on data centers. Meanwhile energy bills keep going up and the data center tsunami continues. The shameful truth is that weak bills like this and overall congressional dysfunction allow tech billionaires to profit while people and our environment suffer the consequences.”