A prominent Senate Democrat has offered a new approach to making data centers pay for the energy infrastructure they require: one that would reshape federal regulators’ role and introduce a binding enforcement mechanism to a problem that has become a bipartisan priority.
In March, the White House made a show of having some of the biggest hyperscalers in the country commit to paying for their own generation and transmission costs. The so-called “ratepayer protection pledge” was presented as a way to encourage the infrastructure build-out that the artificial intelligence boom requires, without burdening ratepayers.
But even as its signatories have multiplied from seven to 200 utilities, data center companies, and Republican governors, the pledge has no real teeth. As President Trump himself implied at the time, it’s a PR exercise for the data centers that are increasingly becoming scapegoats for riding electricity costs. The energy industry largely greeted it with a shrug. (That said, it has already complicated getting at least one major rate-based transmission line built, as Latitude Media has reported.)
The GRID Savings Act, introduced this week, is quite different. New Mexico Sen. Martin Heinrich’s legislation would direct the Federal Energy Regulatory Commission to issue rules for very large loads looking to interconnect to the interstate transmission system, rules that would require them to pay for certain needed grid upgrades — as well as create a path for quicker interconnection in exchange for funding those upgrades.
It would apply to loads of above 150 megawatts, a scale that eliminates many non-data-center large loads. And because it would only apply to loads looking to hook up to the interstate transmission system, it effectively exempts ERCOT, which has the biggest large load pipeline in the U.S.
This would be a significant departure from the status quo. Large loads, including data centers, have always paid for the electricity they consume, but not necessarily for the infrastructure upgrades that their presence requires; large power plants, meanwhile, do have to pay for the upgrades needed to connect to the grid, as well as put up collateral to prove their commitment. As explained in the one-pager summarizing the new legislation, the bill “applies the same basic approach to very large new electricity users.”
This would mark a major jurisdictional change for FERC, which historically has not had power over large load interconnection. On this front, Heinrich is aligned with Energy Secretary Chris Wright, who issued a directive last October arguing that large loads connected to interstate transmission are “squarely within the Commission’s jurisdiction” under the Federal Power Act; he instructed FERC to to expedite the interconnection of large loads that agree to be curtailable, as well as colocated facilities that are both curtailable and dispatchable.
However, in its June response, FERC declined to exert federal authority over the process, which has historically been the province of the states. In a unanimous, bipartisan vote, the commissions acknowledged that existing tariffs are lagging behind the demands of data center loads, but didn’t go so far as to take control. Instead, they issued show-cause orders requiring each regional grid operator (other than ERCOT) to either justify or rework their existing tariffs. This approach, as Latitude reported at the time, is likely to ultimately be much faster than issuing a rule.
The GRID Savings Act, should it become law, would reopen those sticky jurisdictional questions.
This isn’t the first bill aiming to formalize the principles of the ratepayer protection pledge. In July, the House Energy and Commerce Committee advanced its own approach, H.R. 9340. The bipartisan bill is more aggressive about cost-recovery than the Heinrich bill, requiring large loads to cover any generation, transmission, and distribution upgrade needed to serve them, whereas the Senate bill focuses on transmission alone. And the bill has a lower threshold for large loads, at 100 MW.
Rather than involving FERC, that bill would require state public utility commissions to consider how to make data centers pay their own way — essentially encouraging the kinds of large load tariffs that are already taking off.
New data-center-specific utility tariffs are essentially binding versions of the White House’s pledge. According to a Latitude Intelligence analysis, 18 states have a purpose-built data center tariff either in effect or approved. And just like at the federal level, these rules have remarkably bipartisan support: nine appear in states with Democrat governors, and nine in states with Republican governors.
These tend to apply to more loads than either the House or Senate bill would address: The median trigger is 50 MW, according to Latitude Intelligence, and the highest is 100 MW.
