Consumer Advocates Warn Ratepayer Protection Act Falls Short on Datacenter Costs

The bipartisan Ratepayer Protection Act, designed to shield individuals from soaring electricity prices amid the datacenter boom, would fail to meaningfully protect the public from the centers’ true costs, consumer advocates warn.

The bill, backed by some in big tech such as Microsoft, moved through a House subcommittee in mid-June, and a vote in full committee scheduled for 1 July was delayed. Its measures are largely voluntary, meaning the state utility commissions that set electric rates can ignore the law altogether.

The legislative package also includes benefits for big tech that would speed datacenter construction, prioritize the centers’ connection to the electric grid and open new loopholes that would allow companies to claim they are paying for their own power, said Jim Walsh, policy director with Food and Water Watch, which opposes the package.

Ultimately, the bill largely addresses the needs of datacenters and utilities, but not ratepayers, Walsh said.

“They’re taking care of utilities and taking care of datacenters and the bill is posing as a consumer protection measure when in reality it will increase costs on consumers across the board,” Walsh said.

Regions with higher numbers of datacenters have seen electricity costs spike by 267% over the past five years. About 200 new datacenters have sprung up over the last three years to house infrastructure for artificial intelligence. Dozens more have been proposed across the US over the last year, and the centers can consume as much power as the largest US cities.

The Federal Reserve found an as much as 6% average increase in wholesale prices related to datacenters, and as high as 50% in some areas. That does not include other costs that go into prices consumers pay, which has been found to have increased by as much as 267% in regions with higher numbers of datacenters.

The US representative Kathy Castor, a co-sponsor of the bill, touted it in a statement: “My neighbors across Florida are grappling with skyrocketing electric bills. Ratepayers should not have to subsidize wealthy corporations’ growing energy demands, especially from AI datacenters.”

But beyond driving up residential electric costs, the centers often use high volumes of water, pollute, strain local infrastructure and inflict other costs on the public. The Ratepayer Protection Act does not consider those cumulative costs, and instead only addresses “a very narrow piece of utility costs”, Walsh said.

The bill fundamentally takes the wrong approach to consumer protection, advocates also allege. The bill’s sponsors assume rapid AI datacenter growth, when legislators should be pausing datacenter development to ensure that consumers are protected, said Camden Weber, an energy policy specialist at the Center for Biological Diversity. That group and Food and Water Watch have pushed for a moratorium on new AI datacenter projects, a measure also proposed by some members of Congress.

“Congress is treating datacenter buildout like it’s inevitable, when lawmakers actually have the power to slow it down and prioritize protecting our communities, air, water and wallets,” she said.

One provision in the bill would reduce National Environmental Policy Act (Nepa) evaluations that include reviews of local ecological and wildlife impacts for transmission lines or other infrastructure. Nepa has more broadly been targeted by industry and the Trump administration because it adds months to the review process for large federally funded projects. If approved, the change would speed up instead of slow datacenter development.

Connecting to the nation’s energy grid can delay datacenter projects by as much as 12 years, so big tech is increasingly attempting to avoid using the grid by building their own gas plants or clean energy infrastructure.

But the centers are still using natural gas pipelines and massive quantities of fuel, and dramatically increasing demand for components for energy infrastructure, all of which drive up costs for individual consumers.

“These bills make datacenter investments less risky for utilities, which only accelerates buildout at a time when communities across the country are calling for more scrutiny,” Weber said.

Walsh pointed to Georgia, where some regulators have failed to protect water resources, and, initially, did not charge a datacenter for 30m gallons of water use. Most new datacenters use Pfas “forever chemicals” for cooling, which almost certainly pollute the surrounding area and present a greenhouse gas threat. But no emission standards exist.

“We don’t have the regulatory regime to regulate datacenters, but we’re fast-tracking the projects,” Walsh said.

Meanwhile, the provisions that do rein in costs are mere suggestions for state regulators with the utility commissions to follow. The commissions are already broadly accused of putting datacenter needs first and failing to protect residential ratepayers, so there’s little reason to imagine they would wield these voluntary provisions to rein in costs, opponents say.

Walsh said the sum total of the bill does not match its supporters’ claims.

“They’re misleading the public and making it sound like they’re doing more than they are,” he said.