LOCALIZE IT: Data centers require massive energy infrastructure, and the public may foot the bill.
NEW ORLEANS (AP) — EDITORS/NEWS DIRECTORS:
Data centers are increasingly becoming fixtures of the American landscape, with demand for the hulking structures ballooning in recent years due to the rapid growth of cloud computing and artificial intelligence.
States are now competing for big data center developments, with many lawmakers and utilities providers seeing them as an economic bonanza. Legislation is promising lucrative financial incentives to big tech companies and easing restrictions on construction, siting and energy infrastructure to power massive computing clusters.
In Louisiana, utilities regulators in August greenlit upward of $3 billion in grid improvements proposed by utilities provider Entergy solely to serve Meta’s largest data center, which requires more than twice the electricity powering New Orleans. Yet with regulators sidelined from Meta and Entergy’s electricity use contract, consumer advocacy groups and some officials have raised concerns that Louisiana residents will be paying higher electricity bills down the line, as key details about the contract’s terms have been withheld from the public.
As more data centers pop up, demanding massive amounts of electricity and water, lawmakers and regulators are debating how to balance anticipated economic benefits with concerns about how the world’s most powerful corporations may undermine the economic and environmental health of their communities. With utilities seeking to invest billions of dollars into new energy infrastructure tied to the nationwide data center buildout, it’s important for the public to understand how they may be footing the bill for rising electricity costs.
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READ AP’S STORY
Louisiana’s $3B power upgrade for Meta project raises questions about who should foot the bill
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FIND YOUR STATE: DATA CENTERS
There is at least one data center in every state, as this map from the industry site, Data Center Map shows, though it’s worth verifying the information if you are focusing on a specific community.
The large commercial real estate companies can be good sources of information about development of and challenges for data centers, including this Cushman & Wakefield report and this CBRE report.
Data centers usually need to be near cheap sources of water, power and land. Lawmakers tend to want to attract them for their economic activity, and legislation tends to focus on tax breaks as well as water, power and land use.
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REPORTING ON DATA CENTER ENERGY USE
State public service commissions, tasked with reviewing proposed electrical grid infrastructure to serve energy-guzzling data centers, are emerging battlegrounds.
While some states like Oregon have passed legislation to develop standardized, regulator-enforced data center electricity contracts, aimed to protect consumers from paying higher electricity bills, others like Louisiana and Mississippi have taken steps to limit the involvement of regulators, potentially at the expense of consumers.
Check out your state’s public service commission docket for energy infrastructure applications, which will also include useful testimony from proponents and opponents. Environmental groups such as the Sierra Club and state consumer advocacy groups keep close tabs on data center-related energy infrastructure in the pipeline.
Some important reporting questions:
— Has the grid operator or state utility regulator studied the effect of data centers on electricity use and electric rates? Are data center operators reporting to any government agency or utility how much electricity they use?
— To what extent are state regulators involved in reviewing, approving and enforcing contracts (Electric Service Agreements) between utilities providers and data centers?
— How much of the cost of new energy infrastructure are data centers obligated to pay for and what consumer protections are included in their electricity contracts with utilities providers (cost caps, minimum payments, termination fee terms, renewal notices)? How have utilities providers assessed the long-term need for this infrastructure and to what extent have they considered alternatives?
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REPORTING ON DATA CENTER LEGISLATION
Lawmakers are increasingly introducing legislation aimed to help data centers set up shop in their states. State legislative websites have a number of tools to help understand a bill. That includes:
— a copy of the bill text
— videos of legislative hearings
— committee hearing agendas with copies of testimony by witnesses and sometimes the positions of certain groups on the bill, either in favor of or against.
— copies of a fiscal analysis that explains the bill’s provisions and how much it will cost taxpayers.
Types of data center legislation to look out for:
— Tax breaks. Most states offer an exemption to the sales and use tax for data center developers for the equipment, such as servers, to equip a data center and, in some cases, the materials to build them. Some states are expanding their tax break as lawmakers see more potential to attract more projects. Examples of a new tax break passed this year is one in Kansas. Examples of states expanding their tax breaks are ones in Kentucky and Arkansas.
— Land use. Data center operators are running up against local zoning laws in some states and lawmakers may get involved.
— Electric or water use. A number of states are eyeing restrictions on the use of electricity and water by data centers, though some utilities providers are seeking to sideline regulators to speed up development.
Key elements of data center legislation to report out:
— If it’s a tax break, check to see if a state agency or legislative committee has studied how much money will it save a company or how much money it will cost the state. If it’s targeted at a particular project, file a public records request for the company’s application, proposal or signed agreement from the municipality. State agencies that oversee business incentive programs will also likely have that documentation.
— If it involves water use, has a state water agency studied the effect of data centers on water use or water rates? Are data center operators reporting to any government agency or utility how much water they use?
— A bill often gets changed, or amendments are added or rejected. Find out what sorts of concerns drove those changes or proposed amendments.
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READ ADDITIONAL AP COVERAGE
Trump’s AI plan calls for massive data centers. Here’s how it may affect energy in the US
States are rolling out red carpets for data centers. But some lawmakers are pushing back
Facing competition from Big Tech, states dangle incentives and loosen laws to attract power plants
US approves fast-tracking power plants in mid-Atlantic grid over complaints that it favors gas
OpenAI looks across US for sites to build its Trump-backed Stargate AI data centers
Big Tech wants to plug data centers right into power plants. Utilities say it’s not fair
DeepSeek says it built its chatbot cheap. What does that mean for AI’s energy needs and the climate?
As data centers proliferate, conflict with local communities follows
Ireland embraced the AI boom. Now its data centers are consuming too much of its energy
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Localize It is a resource produced by The Associated Press for its customers’ use. Questions can be directed to the Local News Success team at localizeit@ap.org.
