Democratic state lawmakers failed earlier this year to pass a comprehensive law aimed at protecting consumers and the environment from the rapid rise of energy-thirsty data centers in Washington. The bulky bill’s many sections were too ambitious for a budget-dominated 60-day sprint session in Olympia.
But since March, when state lawmakers adjourned, simmering public opposition to data centers has only grown further into a heavy boil. Seven in 10 Americans polled by Gallup oppose constructing them where they live. The Seattle City Council voted unanimously earlier this month to place a one-year moratorium on any new ones until their impacts are better understood.
When lawmakers meet again in January, they should take action. The right question in this moment isn’t whether to regulate data centers but rather how much regulation is necessary.
Lawmakers should take notes from someone who might be expected to resist potentially burdensome new regulations on AI-fueling data centers: Microsoft CEO Satya Nadella.
On a recent episode of The New York Times’ Hard Fork podcast, Nadella responded empathetically to the growing backlash.
“You can’t deny the perception is terrible,” Nadella told the hosts, noting data centers’ water and electricity use and wider AI’s expected job disruption.
“They definitely can’t increase price on energy … they should replenish all the water they use, and create economic opportunity,” he added.
Those three principles — maintaining electricity affordability, local water supplies and ensuring the communities where developers place data centers prosper, rather than languish — sound like a great blueprint for regulating these server-filled warehouses that power the internet, cloud computing and AI.
A poll by Milltown Partners, a tech consulting firm, found the top three public concerns about data centers matched Nadella’s sentiments: that they will push up utility costs, use copious amounts of water and that they’ll benefit the few at the hands of the masses. A skeptical public has made data centers the face of the AI backlash, Axios recently reported.
On the proliferation of data centers, Washington lawmakers did take action against sales tax exemptions for the replacement of servers and equipment within them. However, this wasn’t motivated much by the desire to help ratepayers; rather, it was a way to boost tax revenues in a state struggling to stay within its budget.
A promising start
The year’s main data center legislative effort, House Bill 2515, sponsored by state Rep. Beth Doglio, D-Olympia, turned out to be too ambitious in scope and failed to pass out of a Senate committee. But it had good bones. First and foremost, it required the state’s public and private utilities to charge data center developers at electricity rates different and higher from other customers, to make sure they pay their way onto the grid and avoid jacking up rates for others.
But it also provided transparency into the energy uses of data centers, a start toward requiring them to “replenish” water as Nadella argued.
The bill’s hangup came around the question of curtailment: If energy use is high and the grid is stressed, should data centers have to power down to preserve electricity for other ratepayers?
The answer was “no” for lobbyists representing data centers. They came out in force against lawmakers pursuing that provision.
“Data centers cannot turn off. This is the backbone of the internet,” said Dan Diorio of the Data Center Coalition, a group that includes Microsoft.
But adding perhaps thousands of new megawatts on the grid could strain the rock-solid electricity reliability residents can and should expect.
The prospect of blackouts and energy emergencies grew significant critics, including the Confederated Tribes and Bands of the Yakama Nation. The tribes noted in their own study of data centers that when grid reliability emergencies occur, the state’s legacy hydroelectric dams can ramp up in-water turbines to generate more power — with potentially dire consequences for salmon.
“Salmon protections are suspended during these emergencies and more migrating salmon will be killed,” argued the tribes.
That is admittedly a harder problem to solve. Lawmakers should look for ways to partner with data center developers to establish new clean energy generation and transmission lines to carry it. That could serve new data center loads while also modernizing and greening the electricity grid.
But in the meantime, there should be no excuses stopping lawmakers from pursuing reforms where broad agreement exists. Doglio’s bill is a promising blueprint that has already helped advance discussions within public utility districts and the Utilities and Transportation Commission, which regulates the state’s private utilities.
The Legislature should make regulating data centers one of its highest priorities when lawmakers return to work.
