States are stepping up to protect households from rising energy bills due to data centers

Data centers have become a central topic in conversations about energy. The rise in generative AI platforms like ChatGPT has led to widespread and ongoing buildout of energy-hungry data centers, causing concern about unmitigated load growth and rising energy bills. To meet increased energy demand and ensure grid reliability, expensive grid upgrades are being proposed and implemented – more power generation, more substations, more poles and wires. Without strong regulatory protections, these added grid expenses will be passed on to ratepayers.

In North Carolina, for instance, Duke Energy is proposing an 18% rate hike to prepare for increased energy demand from data centers. The rate increase would raise the average household electricity bill by $280-$355 per year. In the Midwest and Mid-Atlantic PJM region, data centers are expected to raise household electric bills by $70 per month by 2028.

Protecting households from rising energy bills due to data centers is an issue with broad appeal. A recent Gallup poll found that 70% of Americans oppose data center construction in their area, citing concerns about increased water and energy use, increased pollution, land usage, and higher utility bills.

Despite this overwhelming support, the federal government has failed to take any concrete action to protect ratepayers from data center costs, although there has been some movement in that direction:

• Congress is currently considering ratepayer protection legislation, including the Protecting Families from AI Data Center Energy Costs Act.
• The White House announced a voluntary Ratepayer Protection Pledge in March 2026, but it includes no enforcement mechanisms. (The Trump Administration has been a strong proponent of advancing AI development in the US, including fast tracking permitting for data centers on federal land and limiting federal oversight of chemicals used in data center development.)
• In June 2026, the Federal Energy Regulatory Commission (FERC) ordered grid operators to prove that their rules for connecting large energy users do not pass on an undue burden to ratepayers. Grid operators and transmission owners have 60 days to respond to FERC justifying their current rules or making changes.

As Americans wait on finalized federal legislation and interconnection rules, a growing number of states have taken action to protect ratepayers from increased energy bills from data centers. These bills have several overlapping features, including: 

• Requiring a separate electricity rate class or billing tariff for large load customers like data centers (Florida, Minnesota, New Jersey, Oklahoma, Oregon, South Dakota)
• Requiring data centers and other large-load customers to bear the costs of infrastructure and grid upgrades needed to serve them, rather than shifting those costs to other ratepayers (Florida, Minnesota, New Jersey, Oklahoma, Oregon, South Dakota, Tennessee, Texas)
• Requiring greater transparency regarding projected data center energy use and electricity demand to support utility planning and forecasting (Florida, Texas)

Here is an overview of the legislation that has been passed so far:

• Florida: Governor Ron DeSantis signed a bill (SB 484) in May 2026 which prevents data centers from passing costs to ratepayers, preserves local authority to approve or deny data center siting, increases transparency, and establishes some environmental standards.
• Tennessee: The Data Center Cost Responsibility Act (HB 1847), signed into law by Governor Bill Lee in May 2026, prevents data centers from passing infrastructure costs to ratepayers.
• Oklahoma: HB 2992, the Data Center Consumer Ratepayer Protection Act of 2026, was signed into law in May 2026. It requires electric suppliers to create separate terms, conditions, and tariffs for large load customers like data centers.
• South Dakota: SB 135, signed into law by Governor Larry Rhoden in March 2026, protects residents from increased utility costs and shortages from data centers, and clarifies authority to regulate data centers.
• Oregon: The POWER Act (HB 3546), signed into law by Governor Tina Kotek in August 2025, prevents large load customers like data centers from shifting costs to residential ratepayers. It directs the state Public Utility Commission to create a separate rate category for these large load customers.
• Texas: SB6, signed into law by Governor Greg Abbott in June 2025, expands state regulatory oversight over new large load customers like data centers, to ensure grid reliability and protect customers from cost increases.
• Minnesota: HF16, which was approved by Governor Tim Walz in June 2025, included several energy-related provisions, including: establishing a separate customer class for data centers, establishing a fee for large-scale data centers to fund low-income clean energy programs, requiring adherence to existing clean energy benchmarks, requiring data centers to meet sustainable design or green building standards, and eliminating the electricity sales tax exemption for data centers.
• New Jersey: A796 was signed into law by Governor Mikie Sherrill in July 2026. The measure creates a new large-load ratepayer class for data center customers, including a first-of-its-kind incentive for data centers to secure grid capacity by paying for household efficiency upgrades to reduce demand elsewhere on the grid

Energy affordability is not the only issue impacted by the massive growth in data centers. While other states have not passed specific legislation for ratepayer protections, some, such as California and Maine, are focused on studying the full array of impacts before enacting protective policies. New York became the first state to initiate a moratorium on data centers over 40 megawatts. Virginia, known as the data center capital of the world, recently passed a first of its kind electricity use tax on data centers. There are also pending actions in several states, including Texas and Pennsylvania that would address cost and environmental issues associated with data centers.

The regulatory landscape is moving quickly and will likely look quite different in a few months’ time, particularly as the regional grid operators move to modify their interconnection rules. What is unlikely to change anytime soon is the fact that states are leading the way in working to protect ratepayers from higher energy costs due to data center development – and the fact that these efforts appear to have widespread bipartisan support.