Power and Water for Families Act of 2026
- Sponsor
- Rep. Baumgartner, Michael [R-WA-5]
- Committees
- Energy and Commerce Committee (primary)
- Last action
- Jun 24, 2026
Bottom line
The bill aims to balance the rapid growth of energy-intensive data centers and AI infrastructure with the protection of existing utility ratepayers and the promotion of sustainable water practices through a combination of regulatory standards and tax incentives.
What it actually does
This bill establishes federal standards under the Public Utility Regulatory Policies Act of 1978 (PURPA) to ensure large-load electric customers, such as data centers, bear the full incremental cost of necessary infrastructure upgrades and are encouraged to develop additive generation resources. It also creates two new 30% investment tax credits: one for qualifying additive generation projects that provide excess capacity to other customers, and another for qualifying water reuse projects in industrial and municipal settings.
Proponents argue
Supporters argue that the bill is crucial for maintaining American leadership in artificial intelligence by facilitating responsible infrastructure development, while simultaneously safeguarding families and small businesses from increased utility costs. They contend that encouraging large-load customers to invest in their own generation and water reuse promotes energy independence, grid reliability, and environmental sustainability.
Opponents contend
Critics might contend that the mandates for full cost recovery and additive generation could increase the financial burden on data center developers, potentially slowing the growth of critical AI infrastructure in the U.S. Concerns could also be raised about federal overreach into state utility regulation and the overall cost of the new tax credits to federal taxpayers.
The bill is relatively short and clearly structured, allowing for a quick understanding of its core provisions within the typical time allocated for legislative review.
Section 101, amending 16 U.S.C. 2621(d)
Federal Standard for Full Incremental Cost Recovery from Large-Load Customers
This provision amends PURPA to require electric utilities to design rates that recover the full, incremental cost of any generation, transmission, or distribution upgrades necessary to serve a 'large-load customer' (defined as non-residential retail electric customers with 100 megawatts or more peak demand at a single site). It also mandates that utilities require financial assurances from these customers before making such upgrades.
Supporters argue
Supporters argue this provision ensures fairness by preventing existing ratepayers from subsidizing the massive infrastructure costs associated with new, large energy consumers, thereby protecting affordability and reliability.
Critics contend
Critics might contend that mandating full incremental cost recovery could significantly increase the upfront capital expenditures for large-load facilities, potentially deterring investment in critical AI infrastructure in the U.S.
Tradeoffs
This provision balances the need to attract and develop large-scale computing infrastructure with the imperative to protect existing utility customers from bearing the financial burden of these new demands.
Section 102, amending 16 U.S.C. 2621(d)
Federal Standard for Additive Generation for Large-Load Customers
This provision requires electric utilities to consider mechanisms that encourage or require large-load customers to develop, acquire, or contractually dedicate new or incremental generation resources sufficient to serve their own projected load. It also incentivizes making any excess capacity available to other load-serving entities, such as those serving residential or small business customers.
Section 103, amending 16 U.S.C. 2622
Mandated Timeline and Exemption for State Consideration of New Standards
This section sets deadlines for State regulatory authorities and nonregulated electric utilities to commence (within 1 year) and complete (within 2 years) consideration of the new PURPA standards established in Sections 101 and 102. It includes an important exemption for states where comparable standards have already been implemented, considered, or voted on by the state legislature.
Section 105, inserting new Section 48G into the Internal Revenue Code
Qualifying Additive Generation Project Credit (30% Investment Tax Credit)
This provision establishes a new 30% investment tax credit for projects that develop new or incremental electric generation resources to support a large-load facility (100 MW or more) AND make a portion of that capacity (up to 50% of the large-load facility's projected peak demand) available to other eligible load-serving entities through long-term contracts. It includes verification requirements and recapture rules if conditions are not met.
Section 201, inserting new Section 48F into the Internal Revenue Code
Qualifying Water Reuse Project Credit (30% Investment Tax Credit)
This provision establishes a new 30% investment tax credit for projects that install, replace, or modify onsite water recycling systems within industrial, manufacturing, data center, or food processing facilities. It also applies to projects that replace freshwater use with recycled water from a municipal provider, or build/expand municipal water recycling systems to secure recycled water for production or services.
The requirement for large-load customers to recover the full incremental cost of infrastructure upgrades explicitly applies 'in the event of such large-load customer terminating a contract... or otherwise ceasing the purchase of electric energy from the electric utility.'
Section 101, 16 U.S.C. 2621(d)(22)(A)
Why it matters:This is standard legislative practice to ensure comprehensive coverage and prevent loopholes, specifically addressing the risk of stranded assets for utilities if a large customer unexpectedly leaves the system.
Case for: This clause is essential for protecting electric utilities and their existing ratepayers from being saddled with the costs of infrastructure built specifically for a large-load customer who subsequently departs, ensuring financial stability and fairness.
Case against: This provision places a significant and potentially long-term financial obligation on large-load customers, which could complicate their business models, increase their financial risk, and potentially deter investment or make exit strategies more costly.
Estimated impact: Shifts the financial risk of stranded utility assets entirely to the large-load customer, potentially involving millions or billions of dollars depending on the scale of the infrastructure.
Exempts electric utilities in states from the new PURPA consideration deadlines if, before the date of enactment, the state has already implemented a comparable standard, conducted a proceeding to consider it, or the state legislature has voted on its implementation.
Section 103(i)
Why it matters:This is a common legislative technique to address federalism concerns, preventing the federal government from imposing redundant mandates on states that have already taken action on a similar issue.
Case for: This exemption respects state autonomy and avoids unnecessary administrative burdens and costs for states that have already proactively addressed the issues of large-load customer cost recovery and additive generation.
Case against: Critics might argue that the definition of 'comparable standard' could be interpreted loosely, potentially leading to inconsistent application of the bill's intent across states and creating a patchwork of regulations that may not fully achieve the federal policy goals.
Estimated impact: Provides regulatory flexibility for an undetermined number of states, potentially affecting the uniformity of the new federal standards' implementation.
The 'creditable excess capacity' for the qualifying additive generation project credit is capped at 50 percent of the projected peak electric demand of the covered large-load facility.
Section 105, new 48G(c)(3)
Why it matters:This is a technical design choice for the tax credit, intended to balance the incentive for additive generation with the primary purpose of serving the large-load facility itself, rather than creating a general generation subsidy.
Case for: The cap ensures that the tax credit primarily supports generation directly tied to the large-load facility's needs while still encouraging a reasonable amount of shared capacity, preventing the credit from being overly broad or expensive.
Case against: Critics might argue that capping the creditable excess capacity at 50% limits the potential for large-load facilities to become more significant contributors of new, shared generation to the broader grid, potentially missing opportunities for greater grid benefits and resource diversification.
Estimated impact: Defines the maximum scope of the tax incentive for shared generation, influencing the scale of new capacity that will be incentivized for the broader grid.