Data centers face a sweeping new power regime

Lawmakers are considering forcing data centers to shoulder new costs and restrictions while speeding up the energy infrastructure needed to power the AI boom.Why it matters: The bipartisan legislation, unveiled last week, represents the most aggressive response yet from Washington to data centers amid growing backlash over their energy and environmental impacts.Driving the news: The provisions are part of broader Senate legislation aimed at speeding up permitting for energy — but make no mistake: The data-center measures are significant and would go far beyond Washington's largely voluntary efforts to date.The bill's sponsors say it would accelerate energy development while ensuring data centers pay their share of grid upgrades."I don't think we've seen it before," said Ari Peskoe, director of the Electricity Law Initiative at Harvard Law School, about the proposed additional costs and restrictions."But I don't think we've seen growth that's comparable to data centers today, and I certainly don't know any industry whose electricity usage has captured so much political attention."Between the lines: For tech companies, the bill cuts both ways. Congress would make it easier to build the energy infrastructure they need while erecting a sweeping framework aimed at keeping other electricity customers from footing the bill."Just to be candid, having some teeth on data center accountability and ratepayer protection is just table stakes to getting a deal done," said Jane Flegal, a former White House official under President Biden and now a senior fellow at the nonprofit Searchlight Institute.The big picture: Congress has been talking about overhauling permitting for years. The AI boom has given lawmakers an urgent reason to finally act: America suddenly needs enormous amounts of new power infrastructure, fast.Faster approvals for power plants and transmission lines could directly benefit data centers struggling to secure enough electricity for their expansion.How it works: The bill reaches into virtually every part of the relationship between large data centers and the electric grid.Data centers would be required to pay both their share of the existing transmission network and the incremental transmission costs needed to serve them, reversing a decades-old federal pricing policy that generally prevents charging both. This is the biggie, but it doesn't stop there.New data centers of at least 20 megawatts would have to bear the incremental costs they impose across the power system, including generation, storage, transmission and distribution.Regulators at both the federal and state levels could charge large data centers even more than those incremental costs — and use the excess to reduce other customers' bills.Data centers would remain on the hook for infrastructure costs even if they stop buying electricity before those costs have been recovered. Utilities would also have to secure financial guarantees before building infrastructure to serve them, protect