Data Centers Face New Scrutiny Over Energy Use and Utility Costs

Policymakers in several US states and at the federal level have introduced measures and investigations focused on the energy consumption of data centers and its effect on electricity costs for households.

In her 2026 State of the State address, New York Governor Kathy Hochul proposed that artificial intelligence and data center operators either pay higher electricity rates or supply their own power under a program called Energy NY Development. This proposal is part of a broader set of actions by state and federal officials addressing the growing demand for electricity from large technology facilities.

Senators Elizabeth Warren, Chris Van Hollen, and Richard Blumenthal announced in December 2025 that they had started an investigation into whether large technology data centers are contributing to higher residential electricity bills. These senators also requested that companies pay a larger share of grid-related costs upfront to reduce potential impacts on household rates.

In November 2025, Senators Adam Schiff and Edward Markey, along with others, urged the Federal Energy Regulatory Commission to take steps to prevent increased energy demand from data centers from resulting in unjust or unreasonable rate hikes for residential customers. Their request focused on regulatory oversight to ensure household electricity rates remain fair as industrial demand grows.

What the numbers show

• Data centers accounted for about 4.4% of US electricity use in 2023
• US Department of Energy projects data centers could use 12% of US power by 2028
• Ohio now requires data centers to pay for 85% of projected electricity use upfront

Several states have recently enacted or proposed new rules for data centers. In July 2025, Ohio’s Public Utilities Commission approved a rule increasing the required upfront payment for data centers’ projected electricity usage from 60% to 85%. This change aims to shift more of the financial responsibility for grid usage onto large commercial customers.

California passed Senate Bill 57 in October 2025, directing the California Public Utilities Commission to conduct a study on how data center development and grid demands affect ratepayers. The findings from this study are due by 2027 and are intended to inform future policy decisions regarding energy infrastructure and consumer protection.

Minnesota removed a sales tax exemption for large data centers as of December 2025 and introduced an annual fee based on the facilities’ energy consumption. This adjustment is designed to increase the financial contribution of data centers to state revenues and infrastructure costs.

In New York, a legislative proposal (SB 8546) would create a grid modernization surcharge for large data centers, calculated based on energy usage. Revenue from this surcharge would be allocated to projects intended to improve the reliability of the state’s electricity grid.

* This article is based on publicly available information at the time of writing.