Data Centers
How States Are Requiring Data Centers to Pay for Grid Expansion (Comparing Ratepayer Protection Bills Across Five States)
June 4, 2026 | Morgan Scarboro
About one-third of enacted data center energy legislation this biennium includes ratepayer protection requirements, and the trend is likely to keep growing as more states look to shift grid expansion costs away from everyday utility customers. Thresholds for when these laws apply vary widely across states, ranging from 10 MW in South Dakota to 150 MW in Alabama, meaning some states are targeting only the largest hyperscale facilities while others cast a broader net. The mechanisms states use also differ: some rely on traditional utility ratemaking, others require state-established tariffs, and Nebraska simply authorizes public power suppliers to negotiate rates without mandating any specific outcome. How "costs" are defined is one of the more contested elements of this legislation. Florida's law spells out specific cost categories, while Alabama's standard is more open-ended, which will likely lead to disputes over what data centers are actually required to pay. Virginia and other states have been active on data center policy more broadly, so operators tracking ratepayer protection bills should expect continued variation in how states define cost allocation obligations going forward.
-eee9cd-400px.jpeg)
