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Legislation designed to ensure rapidly developing data centers don’t raise residential power bills sailed through a key Congressional committee Tuesday, teeing up a full vote on the House floor.
The U.S. House Energy and Commerce Committee, chaired by Kentucky Republican Congressman Brett Guthrie, advanced the bipartisan Ratepayer Protection Act, 52-0. The bill would require state utility regulators to consider large-load standards and bake in protections to their rulings that make data center customers pay their full share of utility generation, transmission and distribution upgrades.
Similar state-level legislation stalled in the Kentucky Senate this year after pushback from an investor-owned utility and Amazon Web Services. Republicans in Congress, however, say they broadly support ratepayer protections as a contrast to Democratic legislation promoting a federal data center moratorium.
In Kentucky and across the U.S., grassroots organizers are rallying against data centers. Their primary complaint: The enormous amount of energy artificial intelligence and cloud computing campuses use and how residential consumers are often left footing the bill for their infrastructure upgrades.
Data centers promise to consume as much as 12% of national electricity use by 2028, according to a Lawrence Berkeley National Laboratory data center energy use report. Never before in American history have so many small communities been tempted with lucrative tax-generating business proposals that could strain the federal energy grid at that level. It’s setting the stage for a legislative fix the industry isn’t happy about.
Over pushback from the Data Center Coalition, Guthrie’s energy and commerce committee narrowed their ratepayer protection bill on Tuesday to deal specifically with data centers only, exempting other heavy industries that use 100 megawatts of electricity or more.
The Data Center Coalition is the primary trade group representing data centers and other tech computing giants. The group says the committee substitute bill that calls out data centers by name, leaves Americans vulnerable to other large load growth users.
“The data center industry is equally committed to being good neighbors, and that includes our ongoing commitment to paying our full energy costs,” said coalition President Josh Levi in a statement. “The industry will also continue to partner with policymakers, regulators, utilities, and grid operators to ensure that those costs are not passed on to other customers.”
But dozens of states, including Kentucky, allow or have allowed utilities to supercharge their cash flow by borrowing slightly across millions of individual residential users to fund power generation or distribution upgrades before they’re complete. That leaves open the door for ratepayers being left holding the bag if a major data center project pulls out at the last second.
Records for project proposals reviewed by the Herald-Leader reveal just how common data center broker proposals are becoming at public industrial parks. Taken as a whole, experts believe hundreds of communities in and around Kentucky could be approached by speculators seeking cheap land and electricity to build a center promising to meet 21st century web-use demand. But not all of those proposals will actually materialize, leaving it up to small, independent state regulators to protect consumers.
“We need more infrastructure to provide power for large loads, but, in Congress, we also must advance policy to protect reliability for communities and keep costs affordable,” Guthrie said during Tuesday’s committee hearing.
Two dozen states, including Kentucky, have approved individual large-load tariffs for specific users, according to the Smart Electric Power Alliance. The Kentucky Public Service Commission has approved four large-load tariffs, or payment contracts, that are triggered for customers that say they need electricity over a certain threshold.
Utilities under those contracts include Kentucky Utilities, Louisville Gas & Electric Co., Kentucky Power and the East Kentucky Power Cooperative. But only EKPC’s large-load tariff is specific to data centers, and it’s minimum customer load is the lowest, at 15 megawatts of electricity demand.
Five states have enacted specific data center ratepayer protection laws, including Alabama, Florida, Nebraska, South Dakota and Tennessee. States including California, Oregon, Virginia, Utah and South Carolina, have either active legislation, data center-specific utility commission tariffs or pre-contracting policies that prevent data center grid costs from being passed on.
President Donald Trump issued a ratepayer protection pledge for heavy industry users in March, insisting that data centers specifically pay their own way. Several major companies, including Amazon, Google, Meta, Microsoft, OpenAI, Oracle and xAI have already signed on, but the pledge is voluntary, and many leaders on Capitol Hill are taking it upon themselves to fill the gaps left behind by a patchwork of state or industry-level attempts to ensure ratepayers aren’t left paying for the AI economy.
“It has become clear that across the entire industry, there is one entity uniquely positioned to stand up for families and communities who are paying the electricity bills,” said Guthrie. “And that entity is this committee and our colleagues here in Congress.”
