The question of how to supply enough electricity for data centers remains hard to answer, but a view of changing policies in states throughout the United States shows a clear picture: In the areas where data centers are having the most impact, attitudes toward them are souring.

Public opinion is changing to be less favorable to data centers and angrier about higher electricity bills, and even politicians who once celebrated the arrival of data centers in their community and touted artificial intelligence as a new frontier are reversing course as electrical affordability takes center stage in many election campaigns.

The story is the same in many states. Sometime in the 2000s or 2010s, a state passes some laws giving subsidies or other support to developers who want to bring in data centers — and bring them they did. Now they face a different economic picture, with some seeing billions in lost tax revenue and a citizenry asking why they should have to foot the bill for some of the world’s wealthiest companies. There are growing associations between the presence of data centers and increasing electric bills.

States wanted, and many still want, to be seen as technology-forward in the hopes of becoming hubs for advanced artificial intelligence facilities, but now that AI’s needed infrastructure is building out, the question of who will pay for it all has become urgent.

Politicians from both parties are now taking on a more cautious tone about big tech, sometimes promising to impose new fees, environmental regulations or even moratoriums on the data center industry. When customers are asked what they blame for increasing electricity bills, many see hyperscaler companies and data centers as the biggest drivers, particularly in places where they can see the infrastructure going up in their own backyards.

VIRGINIA: Evolving Incentives (769 data center facilities)

Due to a combination of both government-run and private interests, Virginia is currently the data center capital of the U.S., with Loudoun, Fairfax and Prince William Counties, each located in the northern part of the commonwealth, being the foremost hotbeds for data center development.

Some developers used favorable subsidies from local governments to help build their centers, and Virginia and data centers have been synonymous since the 1990s due to a large amount of federal defense, intelligence, energy, space and other agencies hosting their computing power in Washington, D.C.’s backyard. America Online (AOL) also took up Loudoun as its infrastructure headquarters. Subsidies aside, the availability of land and relatively cheap energy made northern Virginia attractive for developers.

Virginia so far has elected to maintain subsidies for data centers, even as the amount of foregone revenue to the state has grown to an estimated $1.9 billion. The commonwealth is instead placing its bets on an energy usage fee as a way to update its policies to the new reality of data centers.

Virginia Gov. Abigail Spanberger told Politico July 6 that her state would enact a statewide energy consumption tax on data centers, paired up with measures to shield electric ratepayers from the costs of installing new energy infrastructure for data centers and other high-demand industries.

“In the budget that we passed, we created the first-of-its-kind consumption tax on data centers and their energy usage,” said Spanberger. “We want data centers to pay their fair share — the way to get at that is by ensuring that they’re paying this consumption tax, based on their energy consumption. And we can couple that into the future with longer-term views of what are the standards we want to set in Virginia for water usage, for backup energy generation.”

According to reporting from the Virginia Mercury, the energy consumption tax could bring in about $600 million per year, with the industry paying 1.1 cents per kWh consumed up to the cap.

Spanberger said she recently appointed and created the office of Chief Energy Officer in Virginia in part to identify ways to protect customers from higher energy bills, according to a release from the Virginia governor’s office.

“Our chief energy officer is doing a lot of our work directly with PJM — really trying to push for some changes and modifications in PJM, both to drive additional energy generation and inclusion of newer energy generation in the PJM marketplace, but ultimately to the benefit of ratepayers across Virginia,” she said.

FLORIDA: Ratepayer Protections (94 data center facilities)

Florida Gov. Ron DeSantis has at times been a critic of data center development, saying that taxpayers should not be responsible to subsidize some of the wealthiest companies in history. In May, DeSantis signed legislation directing the Florida Public Service Commission to keep the costs of new data centers off Floridians’ electric bills.

"You should not pay one more red cent for electricity because of a hyper-scale data center as an individual," DeSantis said as he signed SB 484 at Florida Polytechnic University in Lakeland.

According to Newsweek, the law also empowers local governments to block the development of new data centers. More than a dozen counties and cities in Florida have enacted moratoriums on data centers, according to the Tallahassee Democrat, most of which are temporary and expire within a year.

The issue of data centers has heated up the gubernatorial race in the Sunshine State. U.S. Rep. Byron Donalds and Lt. Gov. Jay Collins both say the state needs more regulations on data centers. Former House Speaker Paul Renner and James Fishback both want either moratoriums or outright bans on data centers.

TEXAS: Reassessing Incentives (723 data center facilities)

As a major energy-producing state, Texas has also become host to a growing number of data centers. Republican State Rep. Shelley Luther told CBS News in an interview that while Texas is known for its size, there are limits to how much development the state can take.

"Steaks don't come from H-E-B, as I like to say. They've got to come from somewhere. Rural Texas. You got to preserve this land and not put a big industrial footprint on it,” Luther said.

Gov. Greg Abbott, who is campaigning for re-election, told a rally that data center developers should be responsible for funding their own projects and the infrastructure that supports them.

"We must prohibit them from building AI data centers in rural Texas neighborhoods, and we must eliminate the tax break they are getting," Abbott said. 

In August, Abbot ordered the Public Utility Commission of Texas (PUC) and Electric Reliability Council of Texas (ERCOT) to halt data center approvals until audits are completed. Audits would include such things as what tax incentives are received, who owns the facilities, power and water use, and any impacts upon local communities. It is not immediately clear how long such audits would take.

This stance represents a shift in Texan attitudes toward Big Tech. Abbott previously called his state “the epicenter of AI development” in November during an announcement of a $40 billion Google project in the state.

GEORGIA: Cost Allocation (296 data center facilities)

Georgia has had favorable laws and incentives for data center development since 2018, when it passed a sales tax exemption to lure large developers into the state. The policy was successful, and the state now has 295 such facilities, according to Baxtel — the largest being a Microsoft facility called Fairwater 2, with a capacity of 300 MW.

How the state’s utilities charge data centers to link up to the power grid is currently under discussion, with the Georgia Public Service Commission voting in July to review Georgia Power’s rubric for determining how much data centers pay for electricity. According to the commission, Georgia Power’s use of real-time power pricing and whether it fully covers what data centers are consuming is at question.

While disputing the notion that large industries are not paying their fair share, Georgia Power told Atlanta News First that it supports the idea of an inquiry.

“In the stipulation that resolved the recent fuel cost recovery proceeding, Georgia Power agreed to review the methodology by which revenue from large customers on the Real-Time Pricing rate is credited to fuel costs,” the company told Atlanta News First.

The Georgia Public Service Commission, according its website, adopted a new rule in January 2025 that large customers with a demand exceeding 100 MW would constitute a new customer class and may have specialized billing terms.

In July, Early County, a rural area near the southwest border of the state, passed a set of restrictions on data center construction, requiring efficient cooling systems, noise limits and a 1000-foot buffer from any home, school or church, according to WTVY News.

CALIFORNIA: Regulatory Oversight (304 data center facilities)

With AB 2469 and AB2619, California’s State Assembly is currently debating its approach to the widespread deployment of data centers within its borders. The bills in question would require developers to project how much water their facilities would use before getting approval to build, as well as require owner/operators to disclose how much is actually used once they are in operation, according to the Sacramento Bee.

Gov. Gavin Newsom, a potential Democratic candidate for president who remains a stalwart for Big Tech, much of which is headquartered in his state, vetoed similar legislation last year.

In his veto, Newsom said “I am reluctant to impose rigid reporting requirements about operational details on this sector without understanding the impact on businesses and consumers of this technology,” adding that data center capacity is “critically important digital infrastructure.

Californians themselves are skeptical of new data centers, with the Public Policy Institute of California finding in July that 73% of respondents opposed new data centers being built in their backyards.

Xavier Becerra, who is currently leading in the California’s gubernatorial race, said Big Tech companies need to pay their fair share and submit to new regulations on their operations.

“California cannot accept technology moving so fast that a worker’s right to make a living and be treated with dignity is left behind, or that a child’s safety comes second to profit, or that the technology poses catastrophic risks to public safety,” Becerra said on his campaign website.

Meanwhile, Pacific Gas & Electric (PG&E) has proposed a rule to the California Public Utilities Commission to streamline the interconnection of large customers such as data centers. The PUC itself suggested as one potential solution, using demand-side management so that large customers shift their electricity use to off-peak times.

The voters of Monterey Park, California voted to permanently ban data centers in their city in June, according to Reuters. This was partially in response to organized public backlash against a planned facility.

OREGON: Large Customer Pay Rates (159 data center facilities)

In a change affecting nearly a million ratepayers, the Oregon Public Utility Commission July 7 unanimously approved a 29.7% rate increase for Portland General Electric’s large electric consumers, including data centers, cryptocurrency companies and large industries, according to Oregon Public Broadcasting.

At the same time, residential customers will receive a 1.3% decrease in their rates. The new rates have already in force, and impact 963,000 customers.

PGE previously made the request in May to make sure its customers are not on the hook for electricity used by large customers like data centers at a time when electricity demand is rising along with rates. The charge is based on “contribution to growth” of electricity demand.

This order is the first use of Oregon’s 2025 POWER Act. The House Bill 3546 was passed by state legislators to address concerns surrounding the rapid development of data center demand. It applies to projects that use more than 20 MW, according to OPB.

Gov. Tina Kotek said this action would protect ordinary ratepayers from the impact of data center demand.

“We must continue to do whatever we can to keep working families and small businesses from absorbing the costs of data center energy use,” Kotek said in a statement.

PGE is the first Oregon utility to change its rates based on the POWER Act’s reclassification of customers. Kotek said she would also heed the recommendations of a newly formed Data Center Advisory Committee as she consults with lawmakers during the January 2027 legislative session in Salem.

ILLINOIS: Policy Reversal (223 data center facilities)

In June, Illinois Gov. JB Pritzker, himself a potential candidate for the Democratic nomination for president, decided to halt data center tax incentives effective July 1. This is a definite shift in policy, as Pritzker was the one who first signed the incentives into law in 2019.

He also asked the legislature to pass more thorough reforms and regulations for laws affecting large data centers, with the legislature having failed to do so by the end of their last session. The laws under discussion would have required water use reporting standards and for data center developers to pay for and have their own supplies of renewable energy to power their facilities, according to Capitol News Illinois.

The state found that data center operators were netting more than $983 million over 4 years with such tax incentives.

IOWA: Balancing Growth (87 data center facilities)

Department of Energy Deputy Secretary James Danly visted Iowa in June to tout the benefits of data centers, calling them critical for America’s future.

“If there are unnecessary regulatory obstacles to the development of data centers, the United States is going to be put back on the scales in competition with other countries,” Danly said, according to the DOE website.

Iowa’s only nuclear power plant, Duane Arnold Energy Center, was slated for decommissioning in 2020, but the plant has found new life in the new high energy demand environment, now slated to re-activate by 2028 thanks to a power purchase agreement with Google.

At the state level, there is a bill under discussion that would create a new water customer class for data centers and other large industries that would use more than 20 MW.

Linn County, Iowa, passed a series of regulations on data centers, including water requirement audits as part of the zoning approval process, water use agreements with the county, noise and light pollution standards, and 1000-foot buffer zones between new facilities and residential areas.

ARIZONA: Strategic Pause (201 data center facilities)

Arizona has not done away with its tax incentives for data centers, but it has paused them for three years, according to the Arizona Capitol Times. During the last session, there were more than 50 pieces of legislation related to energy, and six of them had to do with data center electricity use.

Gov. Katie Hobbs said it was time to put a pause on the incentives because with 86 data center facilities planned in the state, the subsidies had already achieved what they were designed to do.

“I think that this pause in the exemption gives us a chance to really examine the policies,” Hobbs said. “Nobody’s talking about a moratorium on data centers themselves. There are places where they make sense, where they provide economic opportunity and where they’re not sucking the groundwater and overtaxing the utilities.”

Hobbs approach to the subject is an attempt to thread the needle between economic growth and the demands on the power grid and water supply. She signed a bill requiring new reporting requirements for data centers seeking to connect to the power grid, while also vetoing a bill to refer a specific data center’s construction to a ballot measure.

The Arizona Corporation Commission, meanwhile, has approved large load tariffs and expressed interest in “bring-your-own-capacity” programs, according to the Arizona Capitol Times.

PENNSYLVANIA: Higher Standards (127 data center facilities)

Gov. Josh Shapiro, another politician with White House aspirations, once welcomed an Amazon data center to his commonwealth, but is now rolling out a framework for new data center regulations.

The governor’s Responsible Infrastructure Development (GRID) initiative is intended to outline specific steps data center developers must take to demonstrate that proposed projects provide real value to local communities, mitigate or offset any impacts on Pennsylvanians, and are being developed responsibly, according to the governor’s office.

“If companies want the commonwealth’s full support — they must meet strong standards on energy affordability, clean energy generation, transparency, workforce development, community impact, and environmental protection. This is about setting a higher bar for projects and ensuring development happens responsibly and in a way that benefits Pennsylvanians,” Shapiro said.

The measures require data center developers to pay for their own power, among other requirements.

If a project meets the standards set by GRID, it can then be fast-tracked via the Office of Transformation and Opportunity’s PA Permit Fast Track Program, which streamlines permitting for high-impact economic development and infrastructure projects requiring permits from multiple commonwealth agencies.

NORTH CAROLINA: Ratepayer Protection (33 data center facilities)

Another state that is debating regulating data centers with a combination of environmental reviews, noise limits and cooling system restrictions was North Carolina, whose House passed the Ratepayer Protection Act (SB 730) in June. The bill is now under consideration by the state Senate. It would also require developers to pay for their own electricity, according to WNCN News.

The bill would even prohibit using eminent domain for data center construction and prohibit local tax breaks and incentives. The act would apply to data centers of more than 100 MW, so smaller ones would not be affected. On the more local level, some North Carolina communities have also issued moratoriums on new data centers.

Separately, Democratic Gov. Josh Stein has called for eliminating the tax loopholes that allow the data center companies to avoid paying sales and use taxes on the energy they purchase, according to WRAL News.

North Carolina is an attractive prospect for developers, as power and land are relatively cheap, and the government has tried for years to attract technology companies in the hopes of becoming a digital hub of the South.

NEW JERSEY: Fair Share Costs (84 data center facilities)

New Jersey Gov. Mikie Sherrill recently signed major legislation that will hold utility companies and data centers accountable and provide relief to millions of resident households through immediate bill credits.

On July 7, three bills targeting consumer energy savings are reportedly estimated to save N.J. ratepayers more than $1 billion annually.

The first bill, the Advanced Grid Technologies Act (S4411), strengthens state oversight of utility infrastructure investments to prevent excessive spending while supporting grid modernization. Bill two, Repeal ROE Adder (S1673), eliminates an automatic return-on-equity bonus, cutting inflated profit margins utilities receive simply for being connected to the regional grid operator PJM or a regional transmission organization that officials deem “unnecessary.”

Lastly, the Data Center Fair Share Act (S731) ensures big tech and hyperscalers pay for their own electrification demands. By establishing a separate rate-setting process, data centers will foot the bill for their fair share of energy—permanently shifting those heavy infrastructure costs away from New Jersey households.

NEW YORK: Setting Standards (59 data center facilities)

In an executive order, New York Gov. Kathy Hochul created a one year moratorium on new hyperscale data centers for the Empire State. The order pauses state environmental permits temporarily while a framework to protect electric ratepayers from spiking utility bills can be explorted.

“As data center development threatens to hike up utility bills, deplete our natural resources, and create uncertainty for New Yorkers, it’s my responsibility to take action and lead,” Hochul said at a press conference from behind a placard reading “Protecting New Yorkers.” “New York will lead the way in creating the strongest standards in the nation for data center development, ensuring that when companies succeed because of New York, New Yorkers succeed too.”

According to the governor’s office, New York is seeing unprecedented demand for data center development, driven by artificial intelligence and other high-demand computing operations.

The governor ordered the Department of Public Service (DPS) earlier this year to require through policy that data centers either pay more to secure their electricity supply or provide their own infrastructure and electricity.

New York is developing a Generic Environmental Impact Statement (GEIS) for data centers to ensure new data centers coming online are being held to consistent standards, according to a release from Hochul’s office. This standard will be used to assess environmental impacts of newly built data centers, including their impact on electricity demand. Future data center construction will then have to adhere to this standard once it is finalized.

The state will also create a framework for providing clear guidance to local entities to help them negotiate community benefits as part of any large-scale data center deal, including local infrastructure improvements and direct financial support for their community. 

Also under consideration is for the DPS to create a fund to require data centers to invest in power grid upgrades for the state’s aging transmission and distribution infrastructure.

“The fund could support the procurement of new clean energy supply and establishment of an insurance pool to which developers may need to contribute to protect against speculative large loads that create uncertainty and increase costs,” according to the release. “DPS will also consider approaches to require data centers to fund new clean electric generation dedicated to their operations, including but not limited to customer-sited distributed energy resources and battery storage.”

In the legislature, there is also an effort to repeal sales tax exemptions currently in place to make New York a more attractive place for large data center development.

The wave of policy changes across the country signals a new phase in the data center boom. Although approaches vary, a common theme is emerging: Large energy users will face greater scrutiny over how they connect to the grid, how they pay for the infrastructure needed to serve them, and how their growth affects existing customers. As the expansion continues, the states that succeed will be those that can support digital infrastructure growth while ensuring the grid can evolve without placing an undue burden on the customers it serves.