FAIR Data Act
- Sponsor
- Rep. Riley, Josh [D-NY-19]
- Committees
- Energy and Commerce Committee (primary)
- Last action
- Jul 13, 2026
Bottom line
The FAIR Data Act aims to shift the financial burden of electricity grid upgrades driven by large data centers away from residential and small business ratepayers to the data centers themselves or utility shareholders.
What it actually does
This bill amends the Public Utility Regulatory Policies Act of 1978 (PURPA) to prevent investor-owned electric utilities from recovering costs associated with large data centers (over 75 MW peak demand) from residential and small business consumers. It mandates state regulatory authorities to consider and implement this new standard within specific timelines and conditions Department of Energy funding to states on certifying compliance and requiring data centers to report on promised cost savings.
Proponents argue
Proponents argue that the rapid growth of energy-intensive data centers places undue strain on the electric grid, leading to costly infrastructure upgrades that are unfairly passed on to ordinary consumers through higher electricity rates. This bill ensures that the entities primarily benefiting from these massive energy demands bear the associated costs, promoting fairness and preventing residential and small businesses from subsidizing large corporate operations.
Opponents contend
Opponents might argue that this bill could deter data center development in certain states, potentially stifling economic growth and technological innovation. They might also contend that isolating data center costs from the broader rate base could complicate utility planning and investment, and that data centers, like other large industrial consumers, contribute to the overall economic health that benefits all ratepayers.
The bill is concise and relatively straightforward, allowing an informed reader to understand its core provisions within a short timeframe.
Section 2(a)
Prohibition on Cost Recovery from Residential/Small Business Consumers for Covered Data Centers
This provision adds a new standard to federal law, preventing investor-owned electric utilities regulated by states from charging residential and small business customers for any costs related to large data centers. This includes the expenses for upgrading power generation, transmission, or distribution infrastructure specifically to meet the high electricity demand of these data centers. A "covered data center" is defined as one with a peak demand exceeding 75 megawatts.
Supporters argue
Supporters argue this provision directly addresses the inequity of residential and small business consumers subsidizing the massive energy demands of large data centers, ensuring that those who primarily benefit from the infrastructure upgrades bear the associated costs.
Critics contend
Critics might contend that this provision could make states less attractive for data center development, potentially hindering economic growth and job creation, and that the costs would ultimately be passed on to data center customers, potentially impacting digital services.
Tradeoffs
The provision balances the goal of protecting residential and small business ratepayers from rising electricity costs against the potential impact on data center investment and the broader economic benefits they might bring to a region.
Section 2(b)(9)(A) and (B)
Mandated State Regulatory Authority Consideration and Determination Timelines
This section requires state regulatory authorities to begin considering the new standard prohibiting data center cost recovery within six months of the bill's enactment. They must then complete their review and make a determination on implementing the standard within one year. This ensures prompt action by states on the federal mandate.
Section 3(a)
Conditions on Department of Energy Funding for State Regulatory Authorities
This provision ties federal funding from the Department of Energy for administrative or technical assistance to state regulatory authorities. To receive these funds, a state authority must certify annually that it is preventing the recovery of data center-related costs from residential and small business consumers. Additionally, it must certify that it requires data centers that promised consumer savings in their permit applications to submit annual reports on actual cost savings.
Section 3(b)
FERC Annual Report on Data Center Impact
This section mandates the Federal Energy Regulatory Commission (FERC) to submit an annual report to Congress. This report, due by September 30 each year, must detail the impact of large data center electricity demands on residential and small business electricity rates, as well as on the overall reliability of the electric grid.
The prohibition on cost recovery only applies to "State regulated electric utility that is investor owned."
Section 2(a), definition of "Covered utility"
Why it matters:This is standard legislative practice for defining terms, but it's important because it significantly narrows the scope of utilities affected.
Case for: Limiting the scope to investor-owned utilities (IOUs) focuses the policy on entities whose profit motives might incentivize passing costs to ratepayers, while municipal or cooperative utilities often have different governance structures and rate-setting mechanisms.
Case against: Critics might argue that excluding publicly owned utilities or electric cooperatives creates an uneven playing field and allows other types of utilities to continue passing data center costs to their residential and small business customers.
Estimated impact: This significantly reduces the number of utilities directly impacted by the federal mandate, potentially leaving a large segment of the electric utility market and its consumers unaffected by the cost recovery prohibition.
Provides exceptions for states that have already taken action on comparable standards. Specifically, if a state has implemented a comparable standard, conducted a proceeding to consider it, or its legislature has voted on it within the last three years, the new federal deadlines for consideration and determination do not apply.
Section 2(c) and (i)
Why it matters:This is standard legislative practice to acknowledge and avoid redundant federal mandates where states have already acted.
Case for: Supporters argue this respects state sovereignty and avoids imposing unnecessary administrative burdens on states that have already addressed the issue, promoting efficiency and flexibility in state-level energy policy.
Case against: Critics might argue that "comparable standard" could be interpreted broadly, potentially allowing states to avoid the intent of the federal law with less stringent measures, thereby undermining the bill's goal of protecting consumers.
Estimated impact: Could exempt a significant number of states from the immediate federal deadlines, depending on how many states have already engaged with similar policies regarding data center energy costs.