Make Data Centers Pay Act
- Sponsor
- Rep. Vindman, Eugene Simon [D-VA-7]
- Committees
- Energy and Commerce Committee (primary)
- Last action
- Oct 13, 2026
Bottom line
This bill shifts the financial burden of new electricity infrastructure required for large data centers and high-density computing facilities entirely onto those facilities, preventing other utility customers from subsidizing their growth.
What it actually does
This bill amends the Federal Power Act to prevent electric utilities from passing the incremental costs of serving large data centers and high-density computing facilities (defined as 'covered loads' of 20 megawatts or more) to other ratepayers. It mandates that these covered loads bear the full incremental cost of their electricity infrastructure, including generation, transmission, and distribution services, and requires them to provide financial assurances for new infrastructure investments. The bill applies prospectively to new interconnections.
Proponents argue
Supporters argue that the rapid growth of data centers, particularly those involved in artificial intelligence and cryptocurrency, places a significant and often subsidized strain on the electric grid, requiring substantial infrastructure investments. They contend that it is unfair for residential and commercial ratepayers to bear these costs, and that data centers should pay their full, attributable share of the associated infrastructure.
Opponents contend
Opponents might argue that singling out data centers for special, stringent cost recovery could stifle innovation and economic growth in the digital sector. They may also contend that data centers, like other large industrial customers, contribute significantly to the tax base and local economies, and that some level of shared infrastructure cost is a normal part of utility service that benefits all customers.
The bill is very short and straightforward, allowing for quick comprehension of its core provisions and implications.
Section 2, adding Section 224(a) to the Federal Power Act
Definitions of Key Terms
This section defines critical terms for the bill, including 'covered load' as electric load of 20 megawatts or more from data centers or high-density computing facilities (such as those for AI, cloud computing, or cryptocurrency mining). It also defines 'incremental cost' as the additional cost to an electric utility for constructing, owning, and operating generation, storage, transmission, and distribution resources specifically to serve a covered load.
Supporters argue
Supporters argue that clear and precise definitions are essential to ensure the bill's intent is properly applied, preventing loopholes and ensuring that only the intended energy-intensive facilities are subject to the new cost recovery rules, thereby protecting other ratepayers.
Critics contend
Opponents might argue that the 20 MW threshold is arbitrary or that the definition of 'data center or high-density computing facility' could be overly broad, potentially capturing facilities not primarily intended by the legislation or creating ambiguity in application.
Tradeoffs
The bill attempts to balance specificity in definitions to avoid loopholes with the need for flexibility to adapt to evolving technologies and business models in the computing sector.
Section 2, adding Section 224(b)(1) to the Federal Power Act
Prohibition on Ratepayer Subsidy of Covered Load Costs
This provision explicitly prohibits any portion of the incremental cost of serving a 'covered load' (large data centers) from being allocated to, or recovered in the rates of, any customer other than that covered load. This ensures that residential, commercial, and other industrial ratepayers will not subsidize the specific infrastructure investments required for these energy-intensive facilities.
Section 2, adding Section 224(b)(2) to the Federal Power Act
Authority for Regulators to Recover Surplus Amounts
This provision clarifies that regulatory bodies (FERC or State commissions) are not limited to recovering only the incremental cost from covered loads. They retain the authority to recover amounts in excess of the incremental cost. Any surplus amounts collected can then be credited to other customers as a rebate or a reduction to their utility rates, potentially providing a broader benefit to general ratepayers.
Section 2, adding Section 224(b)(3) to the Federal Power Act
Continuing Cost Recovery After Service Termination
This provision ensures that if a data center (covered load) terminates its contract or stops purchasing electricity before its full incremental costs have been recovered by the electric utility, the utility can continue to recover those costs from the data center. This mechanism is designed to prevent utilities from being left with stranded assets or unrecovered investments made specifically to serve a data center that subsequently ceases operations or relocates.
Section 2, adding Section 224(b)(4) to the Federal Power Act
Requirement for Financial Assurances from Data Centers
Before an electric utility constructs or upgrades any generation, transmission, or distribution facility necessary to serve a covered load, it must require the data center to provide financial assurances or contributions sufficient to cover the cost of that facility or upgrade. Any existing financial assurances or contributions provided to a public utility or Transmission Organization for the same facility would be credited against this requirement.
Section 2, adding Section 224(d)(1) to the Federal Power Act
Prospective Application to New Data Center Interconnections
This provision clarifies that the new ratepayer protection rules, specifically subsection (b) regarding cost recovery, only apply to covered loads (data centers) that interconnect to the electric grid on or after the date the bill is enacted. It explicitly states that the new rules do not retroactively apply to existing data centers or arrangements approved before the enactment date.
The definition of 'data center or high-density computing facility' explicitly excludes computing or data storage equipment that is ancillary to a facility whose primary purpose is a commercial or industrial activity other than data processing. This means businesses that use computing as a support function for their main operations are not considered 'covered loads.'
Section 2, adding Section 224(a)(3)(B) to the Federal Power Act
Why it matters:This is standard legislative practice to refine definitions and prevent unintended scope, ensuring the bill targets specific entities without overreach.
Case for: Supporters would argue this prevents the bill from inadvertently penalizing a wide range of businesses that use computing as a support function for their primary operations (e.g., a manufacturing plant with an internal server farm), ensuring the focus remains on dedicated, large-scale data facilities.
Case against: Critics might argue that even ancillary computing can contribute to grid strain, and this exclusion creates a potential loophole if businesses strategically structure their operations to avoid the 'primary purpose' definition, thereby still externalizing some costs.
Estimated impact: Prevents a wide range of businesses from being classified as 'covered loads,' potentially reducing the scope of the bill's impact on the broader economy and focusing its application on dedicated data infrastructure providers.
This 'Rule of Construction' states that, except for the specific ratepayer protection floor established in subsection (b), nothing in this section expands or diminishes the existing jurisdiction of the Federal Energy Regulatory Commission (FERC) or any State, including State authority over retail electric service, rate design, and resource planning.
Section 2, adding Section 224(c) to the Federal Power Act
Why it matters:This is standard legislative practice to clarify jurisdictional boundaries and avoid unintended consequences, reassuring existing regulatory bodies that their authority is largely preserved.
Case for: Supporters would argue this is crucial for maintaining the existing regulatory framework, ensuring that the bill's specific changes do not inadvertently disrupt established state and federal authority over electricity markets. It reassures states that their retail rate authority is preserved.
Case against: No specific opposition is typically raised against such clarifying language, as it aims to prevent unintended jurisdictional conflicts and maintain regulatory stability.
Estimated impact: Preserves the existing balance of power between federal and state regulators in electricity matters, limiting the bill's impact to the specific cost recovery mechanisms for covered loads rather than broadly altering regulatory authority.