A bill that would have required states to consider new rules on how electricity costs are allocated between data centers and other utility customers died in the U.S. Senate on Wednesday. The Ratepayer Protection Act was voted down 57-43, just a few Democratic votes shy of reaching the 60-vote threshold needed to overcome the filibuster.
Sens. Raphael Warnock and Jon Ossoff of Georgia, Maggie Hassan of New Hampshire and Amy Klobuchar of Minnesota were the only Democrats to vote in favor of the bill.
Two weeks earlier, on Sept. 16, the bill received bipartisan support to pass the U.S. House of Representatives by an overwhelming margin of 417-3.
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Americans are increasingly worried about the effects of artificial intelligence, including the resources it takes to run massive AI data centers. The country’s energy regulatory system was not designed with the scale of the data center boom in mind. Utility companies across the country are looking to serve data centers, which could become their largest customers, but consumer advocacy groups have called for safeguards to ensure the cost of new infrastructure does not fall on residents and small businesses.
How was the Ratepayer Protection Act going to work?
The Ratepayer Protection Act was written to amend the 1978 Public Utility Regulatory Policies Act with a directive to state regulatory commissions: Make data centers pay their fair share of electricity costs, including the cost of new infrastructure. Specifically, the bill aimed to require state utility commissions to consider new electricity rate designs for large customers that can consume at least 100 megawatts of power — enough to power about 700,000 homes.
The bill built off the White House’s Ratepayer Protection Pledge, which is a nonbinding agreement signed by Big Tech companies, major utilities and various state governors. That pledge has been criticized for lacking enforcement mechanisms. And previous reporting from Straight Arrow found gaps in state laws and regional governance of electric grids that can lead to residents footing the bill for infrastructure built to serve data centers.
The Ratepayer Protection Act was not meant to mandate any specific changes to state-level policy. State regulators would have remained free to consider the federal directive and then decide not to change anything. That’s because of the 1982 U.S. Supreme Court decision in Federal Energy Regulatory Commission v. Mississippi, which ruled the federal government cannot hand down exact utility rate structures to states.
Why did the bill fail?
Democrats cited the bill’s limited scope as their reason for opposing it.
“Americans are calling for real solutions,” Senate Minority Leader Chuck Schumer, D-N.Y., said from the Senate floor Wednesday. Schumer called the legislation “feeble,” adding, “a guardrail without teeth isn’t a guardrail.”
About half of all states already have electricity rates that separate large data centers from other residential, commercial and industrial utility customers. Consumer advocacy groups have largely supported these distinct rate classes — known as large load tariffs — in which data center developers typically provide upfront collateral payments and agree to minimum contract lengths before a local utility begins building new infrastructure.
However, other costs related to data centers can fall outside the jurisdiction of state regulators, such as construction of new regional transmission lines or the cost of bringing new electricity supply onto the grid.
On America’s largest power grid, PJM in the Mid-Atlantic region, data center load drove up the price of securing future electricity supplies by nearly $30 billion, according to the independent market monitor, Monitoring Analytics. And states located in PJM, such as Maryland, have challenged the cost allocation of transmission lines, which they say passes billions of dollars onto residents for infrastructure that primarily benefits Big Tech.
Rather than state utility commissions, these issues are handled by the Federal Energy Regulatory Commission.
How are Republicans responding?
Republicans defended the design of their bill, which they said gives ample flexibility to the states to come up with varying solutions that work for them. Moreover, they accused Democrats of playing politics ahead of the midterm elections.
“Senate Democrats choose to prioritize political games over a commonsense solution that protects ratepayers across the country,” said Rep. Gabe Evans, R-Colo., who wrote the version of the bill that passed the House earlier this month, in a social media post.
On the Senate floor Wednesday morning, Senate Majority Leader John Thune, R-S.D., said, “The Ratepayer Protection Act is as common sense as it gets.”
Thune said the Democrats were “blocking the path to affordability” on electricity bills based only on “the desire to deny Republicans another win in an election year.”
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