Powering Strong Communities

State Lawmakers Address Costs and Other Issues Tied to Data Centers

With the proliferation of data center proposals across the U.S., state lawmakers are introducing legislation aimed at addressing, among other things, the costs, energy use and potential environmental impacts of data centers.

California

On Jan. 9, California State Senator Steve Padilla introduced Senate Bills 57 and 58, “two measures designed to provide better protections for California ratepayers from increased costs and the state’s aggressive climate goals as more companies develop data centers to meet the growing energy demands of artificial intelligence,” his office said in a news release.

“It is critical that fostering innovation does not come at the expense of higher costs on ordinary families and compromising our climate goals,” said Padilla in the news release. “California is proud to be the home of Silicon Valley and its pioneers. This legislative package provides the state with the tools it needs to protect ratepayers while still championing that enterprising spirit.”

SB 57, the Ratepayer and Technological Innovation Protection Act, would require the California PUC to establish a special rate structure to protect residential ratepayers and small businesses from the cost of building new transmission lines which supply data centers while meeting the state’s climate goals.

“The rate structure will allow companies to prepay expected energy consumption to accelerate grid interconnection while also ensuring the investments into the grid are fully recovered,” Padilla’s office said.

SB 58 would provide a tax credit to data centers utilizing at least 70% carbon-free energy, at least 50% of the energy supply from behind-the-meter sources, does not use diesel fuel, and utilizes recycled water cooling within five years of the certification effective date. It would also require the facility to use a skilled and trained workforce and an investment of at least two-hundred million dollars.

Throughout the upcoming legislative session, Padilla will be holding a roundtable discussion with all stakeholders to ensure full participation from all parties and effective solutions from the legislation, his office noted.

Both bills will be heard in the Senate in the coming months.

New York State

In New York State, State Sen. Kristen Gonzalez has introduced legislation related to the regulation of energy consumption by data centers.

Among other things, the bill says that where a planned data center is projected to have the capacity to consume five or more megawatts at any given moment, a data center operator “shall submit a data center disclosure report to the public service commission prior to commencing any construction activities related to a data center.”

Virginia

Meanwhile, on Jan. 14, a bipartisan coalition of Virginia state lawmakers unveiled a comprehensive legislative package focused on responsible data center growth in Virginia.

“The reforms address critical issues, including the impact of data centers on energy infrastructure, community well-being, and environmental health,” a news release noted.

"We know data centers are imposing a growing demand on the grid. My legislation will ensure they operate as efficiently as possible and increasingly run on renewable energy." said Virginia Delegate Rip Sullivan. "I appreciate the many efforts this session that are aimed at balancing the benefits and costs of data centers."

Here are additional details on the legislation:

House Bill 2101, Senate Bill 960

  • Directs the State Corporation Commission (SCC) to ensure energy expenses are distributed fairly.
  • Mandates the SCC to protect non-data center customers from bill increases associated with data center load growth.
  • Shields residents and businesses from unfair costs linked to new energy infrastructure investments driven primarily by data centers, ensuring that no undue charges are imposed until the SCC establishes proper safeguards.

House Bill 2035

  • The Virginia Department of Environmental Quality (DEQ) will track and publicly report data on energy, water use and emissions from high-energy facilities (requiring >30 MW of uninterrupted capacity).
  • High-energy facilities must file annual updates and notify the DEQ of significant change

House Bill 1601

  • High-energy use facilities (>100 MW) applying for local permits must provide localities with a site assessment examining their noise impact on nearby residential areas and schools, and localities may also require that the site assessment examine impacts on water, agriculture, parks, historic sites and forests.
  • The bill also enables localities to require electric utilities serving the facility to provide information on new generating units, substations and transmission infrastructure needed to serve the project.

House Bill 2027

  • Creates a State Corporation Commission approval process for high load facilities (>25 MW), including hyperscale data centers.
  • Assesses grid reliability, cost impacts, economic contributions and compliance with Virginia’s energy and environmental policies.
  • Integrates DEQ’s environmental assessments into the SCC review process.

Building enough infrastructure for unconstrained data center demand in Virginia “will be very difficult and meeting half that demand is still difficult,” a report released in December concluded.

The report was released in December by the Virginia Joint Legislative Audit and Review Commission. JLARC conducts program evaluation, policy analysis, and oversight of state agencies on behalf of the Virginia General Assembly.

Connecticut

In March 2024, the Connecticut Senate Energy and Technology Committee passed a bill that called for requiring the state’s Public Utilities Regulatory Authority to evaluate the impact of large data centers on grid reliability.

The bill, (Senate Bill 299) introduced by Connecticut State Sen. Norm Needleman, passed the Connecticut Senate 30-6 on May 4 last year, but the House did not take it up before the end of the session calendar year on May 8.

Georgia

In Georgia, Gov. Brian Kemp last year vetoed a bill related to the energy use of data centers in the state.

Among other things, the bill, HB 1192, called for the creation of a Special Commission on Data Center Energy Planning that would:

  • Review existing electric grid and energy supply and make recommendations for data center location, based on such review and consideration of fiber, water, labor, and latency related to data centers;  
  • Make recommendations to expand grid capacity in areas where energy for data applications is most needed;  
  • Make recommendations on any energy generation, transmission, and distribution expansion necessary to serve the industry;  
  • Consider creative approaches to manage usage, including variable load, on-site generation, efficiency, and backup generation; and
  • Examine future trends related to the data center industry, including artificial intelligence and project impact on the electric grid