Changing attitudes toward data centers used by tech companies to support artificial intelligence and cloud computing are coming into focus at the Statehouse.
A year after proposed legislation incentivizing the construction of new data centers failed to pass the General Assembly, legislators are now considering a measure to limit their effect on the state’s power grid and the local environment.
A bill introduced last month by Rep. Brian P. Kennedy, D-Westerly, would require large data centers to pay for all electrical infrastructure upgrades needed to serve them so the costs wouldn’t be passed to other customers.
The measure would require such data centers to submit water efficiency, conservation, or recycling plans, too.
The regulation of data centers is gaining more attention as tech companies and developers look to spend billions of dollars nationwide on ever-bigger data centers, and some U.S. communities are pushing back.
Detractors say the centers need massive amounts of energy needed to power AI, but increase pollution and strain water supplies with their cooling systems. High electricity costs associated with these facilities can also show up on residential utility bills.
“Data centers have become controversial because they often require improvements to the electric infrastructure, with ratepayers footing the bill,” Kennedy said in a statement. “This, coupled with substantial environmental implications, requires a regulatory framework that can balance the economic benefits of data centers with our energy and environmental concerns.”
That’s a shift from last legislative session, when bills were introduced that would have offered long-term tax breaks to developers looking to construct data centers in Rhode Island.
The measures garnered mixed reactions, with proponents touting job creation, especially in construction.
But the matter was tabled after Tax Administrator Neena S. Savage warned that the legislation lacked clear job creation requirements, risked granting tax breaks to out-of-state firms with few local benefits, and used overly broad or outdated definitions that didn’t reflect modern data center operations.
Sen. Louis P. DiPalma, D-Middletown, was the primary sponsor of last year’s incentives bill in the Senate and has already submitted another version this year.
But he argued that Kennedy’s bill would complement his proposal for incentives. He thinks the regulations would ease his own bill’s passage.
“This companion set [of bills] is critical,” DiPalma said.
Under Kennedy’s proposal, data centers requiring at least 50 megawatts of electricity must cover all costs associated with this power, prohibiting them from passing expenses to residents and commercial customers. In addition, the centers would be required to report daily water usage and cooling methods, as well as develop conservation plans.
Larry Chretien, executive director of Green Energy Consumers Alliance, said Kennedy’s legislation “is moving in the right direction,” but still leaves room for improvement.
“Data centers have big impacts on the grid, and therefore consumers and the environment,” Chretien said. “So we absolutely agree with the principle that they should hold the rest of us harmless.”
Chretien said he would also like to see more environmental protections emphasized alongside consumer safeguards.
R.I. Commerce Corp. spokesperson Giselle Mahoney said R.I. Commerce will seek to balance concerns and “recognizes the importance of keeping Rhode Island competitive for new investments and job growth while also protecting ratepayers from bearing undue costs.”
