Data Center Coalition takes case to Hill

The Data Center Coalition on May 18 published a new report aimed at rebutting a fast-growing political argument: that the AI-driven build-out of data centers is directly pushing up household electricity bills. The report, written by Energy + Environmental Economics, or E3, comes as lawmakers, regulators and local officials weigh new limits on data-center growth. Industry officials say they plan to use the analysis in meetings with members of Congress and regulators. The fight has become one of the clearest signs that the AI boom is now colliding with power-market politics as much as software policy. ### What is the industry arguing, exactly? E3 said on May 18 that it found “no historical evidence” that data centers are driving increases in residential electricity costs under existing rate structures. The consulting firm said its paper was funded by the Data Center Coalition, reviewed 11 recent quantitative studies, included interviews with four industry experts and added an original analysis of PJM capacity-auction outcomes. Josh Levi, president and chief executive of the Data Center Coalition, said the report gives policymakers “fact-based insights” into the drivers of residential electricity costs. Levi said the industry is “committed to paying its own way for the power it uses” and would keep highlighting research that, in his words, shows data centers are not the primary driver of rate increases. (ethree.com) ### What does the E3 paper say is raising bills instead? E3 said recent rate pressure reflects a wider mix of forces, including inflation, natural-gas price volatility, grid modernization, resilience spending and wholesale-market design. The firm said the role of data-center load growth varies by region and that the relationship between load growth and retail-rate increases is “unclear.” (compassdatacenters.com) PJM featured prominently in the report because it is one of the markets most closely watched by lawmakers and utilities. E3 said its analysis of the 2024/2025 and 2025/2026 PJM capacity auctions attributed about 50% of the price increase to load growth and the other 50% to market-design changes, plant retirements, reduced accreditation of fossil resources and other supply-side factors. It also said capacity is only one component of a residential power bill. (ethree.com) ### Why are critics and some policymakers not persuaded? The Federal Reserve Bank of Dallas said on March 5 that the data-center boom could raise wholesale and retail electricity prices under a range of scenarios. The Dallas Fed paper said annual PCE inflation in 2030 could rise by 0.04 to 0.13 percentage points under plausible assumptions, and said slower renewable build-out could nearly double that effect. (ethree.com) The Dallas Fed authors also said rapid large-load requests can require costly grid upgrades and that connection fees for those projects are often modest, leaving existing customers exposed to some expansion costs. That line of argument has helped drive proposals in several states to shield ratepayers, shift more costs to operators or slow new projects. ### Where is the political pressure building? (dallasfed.org) S&P Global said on May 15 that lawmakers in nine states had proposed statewide moratoriums on data-center expansion in early 2026. The research note said legislation is being proposed and passed at national, state and local levels as officials focus on grid strain, environmental impact, water use and community benefits. (dallasfed.org) Congress has also entered the debate. S&P Global said Sen. Bernie Sanders and Rep. Alexandria Ocasio-Cortez introduced the Artificial Intelligence Data Center Moratorium Act on March 25, a bill that would halt new developments until Congress passes broader AI legislation and would require protections against higher electricity bills and environmental harm. (spglobal.com) ### Why does this matter beyond utility regulation? Axios reported on May 18 that the Data Center Coalition plans to take its case to Capitol Hill and regulators as the industry pushes back on claims that consumers are being stuck with the bill for data-center growth. That puts electricity-cost allocation at the center of a policy fight that had previously focused more heavily on model safety, misinformation and AI governance. (spglobal.com) The next phase will play out in utility commissions, regional grid proceedings and congressional offices. The Data Center Coalition said it will present the E3 analysis to lawmakers and regulators, while critics are likely to keep pointing to state bills, local opposition and studies projecting higher future power costs. (compassdatacenters.com) (axios.com)