U.S. Senate bill targets data center grid costs to cut household utility bills

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Senate data center grid bill

Highlights

The proposed U.S. Senate bill would mandate that Federal Energy Regulatory Commission require utilities to charge large data centers for both direct service and grid upgrade costs.
A Federal Reserve Bank of Dallas working paper cited in the bill estimates data center demand has increased wholesale electricity prices 6.9% nationally, potentially rising to 12.3% by 2028.
States could use revenue collected from data centers to lower electricity rates for households and small businesses, while enhanced reporting would increase transparency of data center energy use.

Bill framework and regulatory changes

As reported by U.S. Senate Committee on Energy and Natural Resources, citing a fact sheet released by the U.S. Senate Committee on Energy and Natural Resources, the proposal would direct the Federal Energy Regulatory Commission to require utilities to set rates that make large data centers pay both their direct service costs and the grid upgrades needed to support their power demand.

The measure aims to change current Federal Energy Regulatory Commission policy, which the fact sheet says generally prevents utilities from charging customers for both existing grid costs and additional upgrades tied to a new large load. Under the bill, those added charges would become mandatory when grid expansion or upgrades are needed to serve a data center, rather than optional.

Heinrich argues this approach would prevent utilities from spreading the cost of accommodating new data center demand across broader customer bases. The fact sheet says large data centers can require as much electricity as a small city, making the allocation of transmission and grid upgrade costs a growing issue for regulators and utilities.

Potential impact on electricity customers

A working paper from the Federal Reserve Bank of Dallas, cited in the fact sheet, estimates that data center demand has already increased wholesale electricity prices by 6.9% nationally. That figure could rise to 12.3% by 2028, according to the projection referenced in the document.

The bill also would allow states to use revenue collected from data centers to reduce electricity rates for homes, small businesses and other existing customers. In addition, it would require the Energy Information Administration to update its annual survey so utilities report electricity sales to data centers as a separate category, expanding visibility into the sector's energy use.

Our earlier article on the U.S. AI data center boom highlighted how rapid expansion plans are colliding with higher financing costs, construction delays, and tightening power constraints. We noted that only a portion of planned projects look credible as investor sentiment weakens, while grid limitations and local pushback increasingly threaten timelines and budgets.

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