Ratepayer bill gains momentum in House amid data center backlash

A bill that seeks to mitigate data centers’ impacts on Americans’ electric bills is gaining steam in the House, as lawmakers face pressure to act in the face of sharp backlash to the sprawling AI infrastructure.

The bipartisan Ratepayer Protection Act would require states to “consider” standards that put the costs on tech companies, rather than individuals.

Its supporters say it could help alleviate potential price spikes caused by power-hungry data centers, but critics say it doesn’t go far enough to solve the problem.

The legislation advanced out of the House Energy and Commerce Committee on Tuesday in a 52-0 vote, a strong display of bipartisan support and a reflection of how the backlash to the data center buildout has crossed party lines.

The measure, which aims to codify a White House pledge signed by tech giants earlier this year, forces state regulators to hold a hearing on a standard that would ensure that large data centers pay for the cost of new power or power lines stemming from their electricity use. It does not force them to actually adopt such standards.

“[I]t has become clear that across the entire industry there is one entity uniquely positioned to stand up for families and communities who are the ones paying electricity bills-and that is this Committee, and our colleagues in Congress,” House Energy and Commerce Chair Brett Guthrie (R-Ky.) said in a statement.

The Ratepayer Protection Act also recently got a companion in the Senate, bolstering its chances of becoming law.

Sen. Jon Husted (R-Ohio) introduced the measure in the upper chamber last week. A spokesperson for the senator said in a statement that he is “encouraged by the bipartisan support and committee passage in the House” and will continue working with the Senate Energy and Natural Resources Committee to get the bill “across the finish line in the Senate.”

While the legislation’s momentum is growing, it’s still not totally clear whether it will ultimately be taken up to become law. 

Matt VanHyfte, spokesperson for House House Energy and Commerce Republicans, said in an email that he’s “confident it will continue to advance” after passing out of committee.

While the bill does not specifically require states to establish standards, Clara Summers, director of the Consumers for a Better Grid Campaign at Citizens Utility Board,  said that “having direction from Congress is helpful.”

“There are states that are not addressing this issue as proactively…so having a message from Congress that says, ‘Hey, you, within this timeline, need to at least take up this issue,’ is a good push.”

Summers said that the standards that the bill would have states consider would hold “data centers accountable for their generation, transmission, distribution, and other costs” but it’ll ultimately be up to the states whether to act and how specifically.

Even as they supported the legislation, some Democrats on the House Energy and Commerce Committee described it as a “first step” rather than a panacea.

Rep. Nannette Barragán (D-Calif.) said that the bill “recognizes an important principle,” but also said “this is not going to be enough. We need to do more to ensure that families are protected from higher electricity costs while also addressing the health and the environmental impacts.”

Data centers, which are central to powering AI development, have encountered increasing resistance from local communities as tech companies push to rapidly build new server warehouses and expand access to computing capacity.

However, local communities have objected to new data center projects over concerns about electricity prices, water usage and potential pollution. Some experts have also connected the opposition to broader fears surrounding AI, such as job displacement.

Lawmakers are scrambling to find solutions to mitigate their constituents’ concerns. As recently as last year, data center projects were being touted by Democrats and Republicans alike as major investment opportunities for communities.

A Politico poll released Tuesday found that 41 percent of Americans opposed a data center being built in their local area, while 24 percent supported it. In January, just 28 percent opposed such a project and 36 percent were in favor. 

Rep. Kathy Castor (D-Fla.), who sponsored the Ratepayer Protection Act, said that overall, the slate of bipartisan legislation the committee was taking up at the multi-bill markup was inadequate to address the problem.

“I believe that the majority should be doing more at this time to lower household electric bills,” she said, referring to the House’s Republican majority.  “The bipartisan bills are good first steps, yet they do fall short at this time of energy inflation and higher electric bills.”

Castor particularly lamented that the Energy and Commerce Committee was not taking up a bill of hers that would require federal regulators to speed up the connection of new power sources to the grid.

But she also praised the ratepayer bill for telling developers “if a company wants to build a data center, they should pay for the power and grid upgrades that they need.”

“It’s great that the Congress is concerned about price issues. We are living in an affordability crisis. People are really straining to pay their bills, especially their energy bills,” Camden Weber, senior climate and energy policy specialist at the Center for Biological Diversity, told The Hill. 

“But the concerns with data centers are so much broader than just that,” she continued. “There are environmental concerns, water scarcity issues, air pollution, a whole mess of things. And this bill, while it seems good in its intent, it doesn’t go far enough.”

Weber also raised concerns about the way in which the Ratepayer Protection Act works, underscoring that it is “voluntary” and “not a mandate on states.”

However, for some lawmakers, this flexibility is part of the measure’s appeal.

“Importantly, this isn’t Washington dictating outcomes to Louisiana,” Rep. Troy Carter (D-La.) said at Tuesday’s markup. “This bill doesn’t force state regulators to adopt any specific rate structure. It sets a federal standard for state utility commissions to consider, then use their own judgement to decide whether and how to apply it.”

“Local officials know the needs of their area better than anyone else,” he added. “This bill gives them a strong framework and a starting point from which to operate, while preserving the flexibility to tailor solutions that fit each community’s unique mix of growth, infrastructure and ratepayers.”

Asked about whether they expected the legislation to impact policy, Republican committee spokesperson Ben Mullany said via email that the panel was working with states and utilities to ensure they  “have the tools and resources necessary to keep the grid working effectively.”

“The Ratepayer Protection Act, in essence, sends a strong signal from Congress that States need to be examining these large computational loads and working to make sure residential ratepayers do not bear the financial burden of generating and transmitting the electricity needed for those data centers,” Mullany said. 

The bill is also facing blowback from tech industry voices. The Data Center Coalition, an industry trade group backed by several major tech firms, said it opposes recent changes to the bill that limited its scope to focus solely on data centers.

Josh Levi, president and CEO of the Data Center Coalition, said in a statement that the group “supports the original version and intent” of the legislation.

“However, the Energy & Commerce Committee’s changes to the bill narrow its scope to single out the data center industry, leaving everyday Americans vulnerable to the costs associated with large load growth from other industries as they continue to expand operations in the U.S.” he added.

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