Data center development is accelerating across the country at an unprecedented pace, creating significant challenges for utilities, regulators, and state and local governments who feeling the heat to protect electric consumers, the environment, and communities. The enormous electric demands from new data centers are driving new fossil infrastructure, toxic local pollution, and threatening soaring electricity bills. This growth is placing extraordinary pressure on electric grids, utility planning processes, and state environmental goals, often faster than existing regulations - and electric infrastructure - can adapt.
Consumers have been paying attention. In 2025, local opposition to data centers rose dramatically, driven by concerns about rising electric prices and affordability, increased fossil generation, air pollution, water use, noise, and land use. As the Trump administration works to undermine public health in favor of data centers, states need to develop clear, consistent policies to ensure that any data center growth that does occur actually meets a public interest standard. We can start to shield consumers and communities from Big Tech’s energy problem with pragmatic state and regional policies, designed to ringfence data center risk, and steer data center investments towards more sustainable climate, community, and equity outcomes.
In our Data Centers State Policy Guide, we outline four categories of state policy options that offer practical, achievable tools for legislatures seeking to protect ratepayers, uphold environmental and public health standards, and provide regulatory certainty for utilities and developers alike. States will need to move quickly to implement policies and regulations that protect ratepayers, the climate, and communities.
1. Electric Ratepayer Protections
States have a critical role in ensuring that the costs associated with data center growth are allocated fairly. We’re already seeing the costs of data center growth reflected in customers’ bills, and utilities that are pushing data center costs and speculative risks onto ratepayers. Without firm state guardrails, utilities may continue to socialize the costs of new infrastructure for data centers, such as transmission upgrades and power plants, to every day ratepayers.
States can hold Big Tech accountable by:
- Enabling utility regulators to require utilities to design protective large load tariffs for new big electricity customers like data centers;
- Requiring transparency and reporting from utilities on actual electricity consumption and peak usage; and
- Mandating utility regulators to require that utilities establish separable rate classes for data center customers to minimize cross-subsidization.
2. Prioritize Clean Energy
Rapid data center growth is putting clean energy and climate targets at risk. In the absence of guardrails, utilities may rely on new or extended fossil fuel generation to meet near-term demand, increasing pollution and creating long-term stranded asset risks.
States can hold Big Tech accountable by:
- Ensuring that data centers meet or exceed clean energy standards;
- Prioritizing on-site clean energy; and
- Mandating zero fuel cost resources.
3. Reduce Incentives
Many states currently offer significant tax incentives to data centers, despite their limited job creation and high infrastructure demands. In some cases, these incentives exceed the public benefits delivered by the projects and reduce state revenue needed for schools, infrastructure, and essential services.
States can hold Big Tech accountable by:
- Removing data center tax incentives
- Conditioning incentives on verified clean energy use and other community benefits
- Removing or reducing utility economic development rates
4. Protect Air Quality
Data centers often rely on large diesel generators for backup power, which can emit significant amounts of air pollution, such as nitrogen oxides and particulate matter, during testing and power outages. This pollution can contribute to nonattainment of air quality standards and may disproportionately affect communities already facing environmental burdens.
State legislatures can hold Big Tech accountable by:
- Mandating that air permits assess cumulative emissions and simultaneous operations
- Requiring transparency, public comment, and reporting for minor pollution sources
- Preventing expansion of “emergency” conditions that allow for operation of diesel units
- Enacting state level siting regulations and/or incentives requiring on-site battery storage
Taking Action!
As data center development continues to accelerate, state leadership is essential. By establishing clear, common-sense guardrails around cost allocation, clean energy requirements, economic incentives, and public health protections, legislatures can provide certainty to utilities and developers while safeguarding consumers, communities, and the environment. Our Data Center’s State Policies Guide lays out the opportunities for state legislatures to act to hold Big Tech and utilities accountable.