Data center planning for local and state policymakers

The rapid growth of data centers, driven mainly by artificial intelligence, is starting to affect electricity costs and supply across the country. By 2030, data centers are expected to use 12% of the nation's electricity, three times current levels. Most of that added power is expected to come from fossil fuels, especially natural gas, rather than renewable sources, even as the industry receives billions of dollars in tax breaks and other subsidies from state and local governments.

For homeowners, the concern is what this means for electric bills and grid reliability. Some advocates argue that ordinary ratepayers are effectively subsidizing utility buildouts for data centers, since new power plants and grid upgrades built to serve them can raise costs for everyone. There is also a higher risk of power shortfalls or outages as demand grows faster than supply.

In response, some states and communities are looking at ways to shield residents from these costs. Oregon has proposed a rule requiring large industrial energy users — those using more than 20 megawatts — to pay a separate, higher rate, so typical households don't cover the expense of powering data centers. Colorado now requires oil and gas operators to account for cumulative environmental impacts when permitting new projects. Other places are considering limits on diesel backup generators, new taxes on electricity use, or requirements that data centers rely on renewable power.

None of this changes anything for your home directly right now, but it's worth watching whether your state or utility introduces similar rate structures, since they could affect future electricity prices.