Hoping to blunt concerns over the rising costs of electricity in Connecticut and around the country, U.S. Sen. Richard Blumenthal, D-Conn., proposed bipartisan legislation earlier this month to ensure that data centers powering artificial intelligence don’t drive up consumer utility bills. The AI boom has led to a growing demand for new facilities that house the systems and infrastructure that power this technology, as well as cloud services. Some are uneasy about the environmental and energy impacts, and legislators on Capitol Hill are taking note. To address energy concerns, Blumenthal and Republican Sen. Josh Hawley of Missouri introduced the “Guaranteeing Rate Insulation from Data Centers Act,” or GRID Act, earlier this month. The senators have become frequent partners on Capitol Hill in authoring legislation to regulate AI. Their latest bill would require companies that build new data centers with a power demand of 20 megawatts or more to find their own power sources outside of the electric grid and report their estimated utility usage for the next five years. It would also require the owners of existing facilities to cover any costs associated with their operation that would otherwise be passed to customers. “Connecticut has some of the highest energy prices in the country, which makes this bill especially important to us,” Blumenthal said in an interview. “But consumers in any state deserve protection against data centers swallowing power and sending prices sky high. They should bear the burden of the additional costs they created because they also receive the additional profits that data centers enable.” Under the bill, existing data centers would have a 10-year window to wean themselves off of the grid. During that period, the owners of those facilities would have to pay “zero rate effect credits” to offset the cost of any infrastructure upgrades or local increases in the price of electricity that are attributable to the demand from data centers. The bill gives the U.S. Secretary of Energy discretion over who receives payments from those credits. Blumenthal said it would likely go to either utilities or regulators like Connecticut’s Public Utilities Regulatory Authority, which would need to certify those savings get passed along to consumers. The bill also implements an enforcement mechanism. If a data center is found to have drawn power from the grid in violation of the law, it will get hit with a civil fine of $1 million a day. Other federal lawmakers have introduced similar bills regarding data centers and their impact on utility bills, but this is the first bipartisan one. U.S. Sen. Bernie Sanders of Vermont has called for a nationwide moratorium on the construction of new data centers. It’s unclear what reception the GRID Act will get from Congress, and Blumenthal said he hasn’t yet broached it yet with Republican leaders in the Senate. President Donald Trump has signaled an interest in ensuring Americans don’t pay higher bills because of data centers. He recently posted on the platform Truth Social that major tech companies who build them must “pay their own way.” “It certainly aligns with the White House statement, though the president’s comments are very, very broad, but it’s consistent with the basic idea coming from the White House and coming from other members of Congress that consumers shouldn’t have to shoulder the burden of rising electricity costs produced by data centers,” Blumenthal said. But Trump put a spotlight on the issue during Tuesday night’s State of the Union address. He told Congress he reached agreements with major tech companies, telling them they “have the obligation to provide for their own power needs.” He didn’t specify which companies committed to building their own power sources for any new data centers. “Many Americans are also concerned that energy demand from AI data centers could unfairly drive up their electric utility bills,” Trump said Tuesday. “It will ensure the company’s ability to get electricity while at the same time lowering prices of electricity for you, and could be very substantial, for all of your cities and towns.” The bill is almost certain to face heavy opposition from the tech industry as well as state and local officials who see data center development as a driver of economic development. Tom Quinn, the developer behind NE Edge, a proposed 300-megawatt data center on the site of the Waterford’s Millstone Nuclear Power Plant, said the bill goes too far by requiring data centers to be completely separate from the grid. That would prevent data centers from connecting directly to existing power plants, like the Millstone proposal and a similar project Quinn is exploring next to a gas-fired power plant in Killingly. By being located at those plants, Quinn said, the projects avoid costly interconnection upgrades. In addition, he said, both projects will come with enough backup power from gas generators to run completely off-grid in the event of an emergency. “A co-located data center actually helps the plants stay stable and profitable, as long as they have demand-response protocols,” Quinn said. “It’s that simple.” Quinn said that federal lawmakers should attempt to mirror legislation recently enacted in Texas, which requires large data centers to pay for interconnection upgrades and sets rules regarding facilities co-located at existing power plants. In addition, the law allows the grid operator to shut off power to data centers in the event of an emergency. “It could be useful if it was tuned up, but it needs to be more specific,” Quinn said. Blumenthal said the legislation has been changed since it was introduced. He and Hawley also debated whether to reduce the 10-year time frame for existing centers to find new power generation sources. “The idea is to give them some path to meet the requirements of the statute, since they may not have already planned for it or complied with it,” Blumenthal said. One provision in the bill that was a condition for Blumenthal’s support was that any company looking to build a new data center must enter into a project labor agreement. Fred Carstensen, a professor of finance and economic at the University of Connecticut, has been a vocal proponent of leaning into data center development as a way of boosting the state’s post-industrial economy. But in an interview last week, even he said that the sudden growth of data centers is likely to bring about new problems unless lawmakers come up with additional regulations. “Under the current regulatory framework, a lot of the cost of all of the new infrastructure and generation capacity, some significant share of that would be shifted onto all ratepayers,” Carstensen said. “The benefit of it is going entirely to the AI [industry], and clearly that seems unfair.” While Connecticut is already home to a few dozen smaller data centers, it has yet to see the development of any of the newer generation of “hyperscale” data centers being built to serve AI software and other large tech companies such as Google and Amazon. A single hyperscale data center can run on more than 100 megawatts of electricity, which is roughly the output of a 700-acre solar array. As recently as 2024, there was little interest from large data center developers to hook up to New England’s power grid, according to Jacob Lucas, the vice president of transmission system planning for Eversource. That was largely due to the region’s relatively high cost of electricity as well as the demand being centered around the national security community in Virginia. Over the last two years, however, Lucas said that demand has risen to the point where between 2,000 and 7,000 megawatts of electric capacity is being studied for potential use by data center developers. That’s enough electricity to power the entire state of New Hampshire during the peak of summertime demand. “We kind of knew this the day the day was going to come eventually, and it’s definitely here now,” Lucas said. When a data center developer requests to connect with Eversource’s transmission system, Lucas said, federal rules prevent the utility from turning them away. While Lucas said that Eversource does require developers pay for any costs associated with building the infrastructure necessary to connect to existing lines, that approach is not standard throughout the industry. The alternative approach — known as “regionalization” — spreads the cost of those upgrades to all of the customers within a regional grid organization, such as ISO New England. “I just am concerned that to the extent data centers try to lobby for the kind of cost-allocation methodology that’s happening down in Virginia … that could be difficult in New England,” Lucas said. “It could potentially assign some of the costs for data centers to our other customers.” Eversource has not taken an official position on Blumenthal’s legislation. A spokesperson for UI declined to comment. Discussions around AI and electricity capacity related to data centers came up at the National Governors Association winter meetings in Washington, D.C., last week. Gov. Ned Lamont said Ruth Porat, the president and chief investment officer for Google’s parent company, met with governors and told them they’re bringing in their own power for new centers. In 2021, Lamont signed legislation offering new tax incentives to data center developers in hopes of luring the industry to Connecticut. More recently, he has echoed other leaders by saying that data centers should have to bear any costs related to the additional strain placed on the power grid. Lamont said his conservation with Porat focused on striking a balance between driving innovation and addressing concerns around algorithmic bias, deep fakes and job loss. “The deal for us and everybody else is we’re not doing any new major data centers if they suck energy, drive up prices,” Lamont said in an interview after the NGA meetings. “We’re not the most popular place to locate a data center because we’ve got high electricity prices.” “Right now, electricity prices are the dominant issue,” he continued, “and they’re not going to help on that front.” According to a recent report from the Department of Economic and Community Development, only one company — Cigna — has qualified for the state’s data center tax incentive program. The company is planning a $386 million renovation of its existing data center in Windsor. Lawmakers are currently considering legislation that would repeal the tax incentives. ...read more read less