The AI Data Centers Bill Moving through Congress Lacks Ambition and Impact

Everyone is worried about artificial intelligence (AI) data centers — especially as the cost-of-living crisis worsens and electricity prices continue to outpace inflation — and Congress is finally taking note. The Ratepayer Protection Act, which was recently passed by the House of Representatives, is Congress’ first attempt at addressing the impacts and unpopularity of AI data centers that have gained serious traction. The bill tries to address the urgent need to hold data centers responsible for the costs of their own energy, but it doesn’t go far enough to fix the scale of the problem, which goes way beyond cost.

Our country is experiencing a dramatic rise in energy demand, one that’s been largely fueled by the boom in AI data center developments. Hyperscale data centers consume colossal amounts of electricity: for example, OpenAI and Nvidia’s latest project is projected to use enough energy to power six million homes.

Congress can and should get tech companies to cover the costs of their own power generation to prevent American consumers from footing the bill. The Ratepayer Protection Act tries to respond to a real affordability issue at a time when nearly two-thirds (63%) of Americans are living paycheck to paycheck.

But it doesn’t do enough to address costs, which is just one aspect of a complicated problem.

The Ratepayer Protection Act is a first step in tackling the energy cost impact of AI data centers. But it’s just that: a step. States only need to consider adopting the standard the bill creates, and regulators could choose to ignore it. Further, the bill does not address the full scope of data center impacts on energy costs, which is just one of the many problems associated with hyperscale data center buildout. People’s concerns about AI data centers extend beyond their effects on our electric bills. If members of Congress are serious about protecting their constituents from the impacts of a rushed data center buildout, they must pass policies that accelerate and incentivize clean energy adoption, require transparent and timely information from AI companies, and keep communities engaged and involved in project proposals.

Why AI data centers impact electricity costs

In most states, utility companies invest in energy infrastructure, then they recover those costs through customers’ electricity bills. Residential ratepayers often pay significantly more than other customers per kilowatt-hour and generally have higher rates than industrial or commercial customers. Due to the AI boom, expectations of future data center demand are extraordinarily high, though also highly speculative. Nonetheless, utilities are proposing a lot of new fossil fuel generation to meet that projected demand; gas-fired power development for data centers has almost doubled in less than a year, reaching a staggering 189 gigawatts.

Large industrial users should, in theory, already cover the cost of upgrades required for their electricity use. But it’s not always straightforward in practice. AI data centers are so large that they can negotiate directly with the utility to establish special agreements that determine what price they pay, and what that covers.

As an example, Entergy — a Louisiana energy utility — wants to build 10 new gas plants to service a gigantic AI data center campus for Meta. If the energy services agreement does not sufficiently account for these costs, they will get passed on to other utility customers. There’s also a risk of stranded assets: customers footing the bill for a project that doesn’t use up as much energy as a company thought it would, or gets cancelled entirely. While the costs of building a new power plant — along with the new pipelines to service it — are recovered over the infrastructure’s expected lifetime (which could be 40 years), initial contracts usually are for only half that length or less. If the data center company does not renew the contract, other customers are virtually guaranteed to have to pay for the remaining life of the plant. Similarly, if Meta doesn’t end up needing as much power as it says it will, or a data center company goes out of business, regular utility customers could be left holding the bag.

Even worse, the public often cannot verify the promises being made. Across the country, utilities and developers frequently rely on non-disclosure agreements that conceal critical information about projected energy use, costs, and community impacts. In the Louisiana development, Meta refused to turn over key information to the public about how much energy its AI data center will actually need and how much of those costs will be passed on to Louisianans, making it even more difficult for the public to verify whether Meta is upholding its pledge to protect ratepayers. This refusal ultimately was supported by the Louisiana Commission.

A host of other factors also affect our energy bills, including the cost of rebuilding after natural disasters, extreme heat, and aging infrastructure. Building the largest fossil fuel power plants in U.S. history to power AI data centers only exacerbates these problems, regardless of who pays the infrastructure cost. Meanwhile, nearby communities will pay the cost of all that new pollution with their health.

So how does the Ratepayer Protection Act protect consumers from rising energy costs?

What it does:

Correctly identifies large load tariffs — the price hyperscale data centers pay for electricity — as a key tool to protect everyday ratepayers from high electric bills. The bill directs the Federal Energy Regulatory Commission (FERC) to create a voluntary standard for large load tariffs that require data centers to cover the costs of new energy generation and infrastructure upgrades needed to serve them. It also includes some provisions to guard against the risk of stranded assets.

What it doesn’t do:

Comprehensively protect ratepayers. States are only required to “consider” adopting the standard and can ultimately choose to opt out. The Ratepayer Protection Act also fails to address the impact data centers have on communities’ air quality and water supply, as well as other utility bills like water or gas. The bill does not have any clean energy requirements, so it could actually make air quality and climate issues worse if data centers comply with the standard by building more underregulated fossil fuel plants.

What we need

More transparency and community protections:

Companies should not be given a free pass to pump more pollution into our communities just to accommodate a self-imposed data center buildout. We need policies that increase transparency and empower communities to shape decisions about data center developments before, during, and after construction.

Accountability and enforcement:

To keep data centers accountable to the communities in which they are built, they should be required to make their data on energy, water use, noise levels, and emissions publicly accessible to communities, as well as state and local governments. Policymakers should also be working to strengthen and modernize bedrock environmental laws that protect communities’ air, water, and lands, and fight back against efforts to undermine crucial protections in the name of “speed to power.”

Incentivize clean energy adoption:

Clean energy continues to be the fastest and cheapest way to meet rising energy demand. Unfortunately, hundreds of gigawatts of renewable energy projects are languishing in interconnection queues as they wait to connect to the grid and navigate an onslaught of political attacks. If Congress is serious about protecting people from high electricity bills, they must pass the policies needed to bring clean energy online — and quickly — while requiring data centers to pay their fair share.

In summary

It’s good that Congress is finally beginning to grapple with the very real and dire consequences of the AI data center boom; the Ratepayer Protection Act acknowledges that everyday Americans should not be forced to subsidize it. Protecting ratepayers is a critical step, but communities also deserve clean air, clean water, clean energy, transparency, and a meaningful voice in decisions that shape their future. To fulfill their duties to the American people, Congress must do more to regulate AI data centers and the companies racing to build them.