The House overwhelmingly approved bipartisan legislation aimed at preventing American households and small businesses from being forced to shoulder electricity infrastructure costs generated by the rapid expansion of massive data centers.
Lawmakers approved H.R. 9340, the Ratepayer Protection Act, by a 417-3 vote on Sept. 16, sending one of Congress’ most significant responses to the data-center power boom to the Senate.
The measure would establish a federal framework encouraging state utility regulators to ensure that exceptionally large electricity users pay the infrastructure costs directly associated with serving them.
The legislation defines covered “large-load customers” as nonresidential customers operating information-technology infrastructure, including data centers, with peak electricity demand of at least 100 megawatts at a single location or campus.
Rep. Gabe Evans, R-Colo., introduced the legislation alongside Rep. Kathy Castor, D-Fla.
“Large load data centers must cover the full costs of any system updates they require, not families or small businesses,” Evans said while promoting the legislation.
The central concern involves the enormous amount of new electricity infrastructure that can be required when a large data center connects to a utility system.
Serving one of those facilities can require utilities to build or upgrade power plants, transmission lines, substations and distribution equipment.
Unless regulators establish specific protections, some of those costs could eventually be incorporated into the broader utility rate base and paid by existing residential and commercial customers.
The Ratepayer Protection Act seeks to limit that possibility.
Under the legislation, state regulators and certain utilities would be required to consider standards establishing special rates for covered data centers and other qualifying large-load customers.
Those rates would be designed to recover the “full, incremental cost” of generation, transmission and distribution upgrades necessary to serve the new customer.
The proposal would also encourage financial guarantees before utilities make major investments.
That provision is intended to address another potential problem: a utility spending heavily to prepare for a proposed data center only to have the project canceled, scaled back or shut down before the infrastructure costs have been recovered.
Under the proposed standard, large customers could be required to provide financial assurances or upfront contributions covering infrastructure investments.
The legislation nevertheless leaves considerable authority with individual states.
It amends the Public Utility Regulatory Policies Act of 1978, or PURPA, by creating what is known as a “must consider” standard.
State regulators would have to formally consider the federal principles but would retain substantial authority over their own electricity markets and utility-rate structures.
That distinction has drawn some criticism from both directions.
Some lawmakers and consumer advocates want stronger nationwide protections, while parts of the utility industry argue that states and local utilities are already developing their own approaches and do not need another federal requirement.
The American Public Power Association, for example, said it supports protecting existing customers from data-center costs but opposes creating another PURPA mandate because many publicly owned utilities already have large-load policies in place.
The bill’s broader objective, however, attracted overwhelming bipartisan support.
The House Energy and Commerce Committee approved the legislation 52-0 in July before the full House passed it 417-3.
Supporters argue that the United States should continue aggressively developing artificial-intelligence infrastructure without requiring families, farmers and small businesses to subsidize the companies creating the additional electricity demand.
House Energy and Commerce Committee Chairman Brett Guthrie, R-Ky., said data-center development can bring significant investment and infrastructure improvements to local communities when handled responsibly.
The legislation, Guthrie said, is intended to ensure that the companies constructing those facilities — rather than ordinary utility customers — pay the associated electricity costs.
The issue is becoming increasingly important as artificial intelligence and cloud computing reshape U.S. electricity demand.
The U.S. Energy Information Administration expects electricity consumption to reach record levels in 2026 and 2027, with data-center development and manufacturing driving much of the increase.
EIA expects U.S. electricity sales to rise nearly 2% this year and another roughly 2% in 2027.
Commercial-sector electricity demand is growing particularly quickly, with EIA projecting commercial sales will increase 3.3% in 2026.
That represents a major shift after years of relatively stagnant American electricity consumption.
Between 2005 and 2019, U.S. electricity demand grew by only about 0.1% annually. Between 2020 and 2025, growth accelerated to approximately 1.7% per year, with data centers playing an increasingly important role.
Utilities and grid operators are simultaneously confronting another problem: speculative data-center projects.
Requests from proposed data centers seeking electricity connections have surged to extraordinary levels, but some projects may never actually be constructed.
Reuters reported this month that requested data-center connections nationally exceed 700 gigawatts — more than 10 times the estimated current electricity consumption of existing U.S. data centers.
Texas recently paused some new connections while examining potentially speculative projects, while utilities elsewhere have begun requiring larger deposits and other financial commitments before making expensive infrastructure investments.
This article may contain commentary which reflects the author's opinion.
