Rapid expansion in artificial intelligence, cloud computing and other digital services is driving demand for data centers while intensifying debate over electricity, transmission, water use, tax incentives and local impacts. Policymakers in both political parties are examining how the costs and benefits of new facilities should be allocated.
Texas is among the states considering tighter requirements. On June 10, Governor Greg Abbott asked state utility and grid officials to prepare issues for the Legislature’s 2027 session, including requiring data centers to pay for electric infrastructure serving their facilities, contribute additional capacity as demand rises and use water-efficient cooling systems. The proposals also include annual reporting of electricity and water consumption, possible changes to sales-tax exemptions and incentives, and local standards addressing setbacks, noise and other community effects.
A Pew Research Center survey found that respondents from both parties expressed concern that data centers could raise household electricity costs, while majorities of Republicans and Democrats reported discomfort with a new facility operating near their communities. Republicans were more likely to cite local jobs and tax revenue as benefits, while Democrats showed greater concern about environmental effects.
Electricity allocation is also being addressed in North Carolina. Duke Energy’s two utilities and the state agency representing customers filed a settlement that would establish new rates for very large power users. The proposal includes upfront payments for customer-specific grid equipment, deposits for broader upgrades, minimum monthly bills equal to 75% of projected demand and damages if a customer ends its agreement early or reduces contracted demand. The rules would apply to customers using at least 50 megawatts at an 80% load factor that sign service agreements after June 1, 2026. The state utility commission is expected to rule by mid-November.
At the federal level, a bipartisan Senate permitting proposal released September 30 would require data-center developers to cover certain transmission costs attributable to their projects. The Senate is expected to consider permitting legislation during the post-election lame-duck session, while lawmakers continue to debate electricity costs, transmission capacity and who should pay for infrastructure supporting large computing loads.
Virginia is pursuing a separate approach. In September, Governor Abigail Spanberger signed an executive order that bars nondisclosure agreements with state agencies, creates an artificial-intelligence task force and directs development of new environmental regulations. The order does not impose a moratorium but asks state agencies to consider guardrails and the General Assembly to consider related legislation in 2027.
The next phase of policy development will include decisions about tax incentives, generation and transmission costs, cooling and water standards, zoning, noise, setbacks, community engagement and federal permitting. Differences among jurisdictions could affect where future projects are built, as developers weigh infrastructure requirements and local restrictions alongside construction activity, investment and potential property-tax revenue.