Washington state lawmakers take on data center costs
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Washington lawmakers are taking aim at power-hungry data centers, pushing to make them shoulder more of the costs their growth is expected to place on the state's electric system.
Why it matters: Without new rules, some lawmakers warn the expense of serving massive new data centers could spill onto everyone else's electric bills — and complicate Washington's transition away from fossil fuels.
Zoom in: New legislation in Olympia would require electric utilities to adopt rules or policies for serving large data centers, which the facilities would have to accept to receive service.
- Those rules would make data centers responsible for the full cost of connecting their facilities to the grid, along with other system upgrades needed to serve them.
- The rules would include financial guarantees and exit fees aimed at keeping utilities and other customers from absorbing costs if a facility scales back or shuts down.
- Data centers would also need to limit power use during emergencies if a utility requests it.
Context: Data centers — which are central to fueling the AI boom — are expected to be the biggest drivers of increased electricity demand in the Pacific Northwest in the coming years, according to a preliminary report released in December by a state data center workgroup.
- Further data center growth in Washington would require "significant electric power grid expansion," the report said.
What they're saying: "Primarily, I'm concerned about affordability," state Rep. Beth Doglio (D-Olympia), the sponsor of House Bill 2515, told Axios.
- "I want to make sure there's not a cost shift to everyday ratepayers like you and me and other Washingtonians."
- She said she's also focused on ensuring the state meets its climate goals, which include transitioning to 100% clean electricity.
- Her bill would require new and expanded large data centers to certify that they are fully powered by renewable or non-emitting electricity by 2036, and require new reporting on data centers' energy and water use.
The other side: Industry officials warn that the legislation would single out data centers and discourage future investment in Washington.
- "By making Washington an outlier, this would significantly impact the competitiveness of the Washington market," Dan Diorio, vice president of state policy for the Data Center Coalition, told Axios.
- Diorio, whose group represents major tech companies including Microsoft and Amazon, said the industry is already leading on clean-energy procurement.
He also raised concerns about requiring data centers to curtail power use during emergencies, saying facilities "will be forced to utilize their backup generation" because they "provide essential services."
- "It's your electronic health care records, it's your banking and financial records, 911 geolocation services," Diorio said. "Data centers cannot turn off."
Between the lines: State Senate Majority Leader Jamie Pedersen (D-Seattle) told Axios that years of state tax breaks aimed at attracting data centers have had unintended consequences, including "peak demand problems" that risk driving up electricity costs for regular customers.
- "I think in hindsight, we've kind of created a monster," Pedersen said.
- Doglio's bill would impose a state fee on large data centers based on their electricity use, with part of the revenue going toward helping people pay their utility bills and electrify their homes.
What's next: Doglio's legislation cleared a state House committee on Monday. A state Senate committee is likely to vote on a similar bill Tuesday.
- Either measure would need to pass both chambers and avoid a veto from the governor to become law.
- The legislative session is scheduled to last through March 12.