Policy group calls for data center power studies, tax break reviews
Advancing American Freedom Foundation wants Congress to see how much electricity data centers use. It also wants states to reveal how much their data center tax breaks cost.
The conservative group made those recommendations in a paper by Kevin Dayaratna. He’s the president of AAFF’s Institute for Statistical Policy Analysis.
The paper argues that lawmakers and utilities need better information before deciding data center policy. He said these policies impact state budgets and utility costs.
“There is no precise aggregate measure of how much electricity data centers consume,” Dayaratna wrote.
He used Ohio as an example of where this would’ve helped.
The state projected that its data center sales tax exemption would cost about $136 million in 2025. Its tax department later told reporters it would cost $1.569 billion, according to published reports. That’s more than 11 times the first estimate, the paper says.
The department also shared those figures with a news outlet instead of posting them on a state website.
Texas had something similar happen.
In February 2023, the state projected that its data center exemption would cost $130 million in fiscal year 2025. By January 2025, that estimate ballooned to $1.016 billion.
“States should publish these figures and review these exemptions on a fixed schedule,” Dayaratna wrote.
The paper also looks at power forecasts changing.
In 2022, Georgia Power expected demand to grow by less than 400 megawatts by 2031. A year later, it raised that estimate to 6,600 megawatts.
Dayaratna thinks both low and high forecasts hurt customers.
Too little power can cause shortages, too much can raise electric bills, he noted.
The paper cites projections saying data centers may use 9% to 17% of American electricity by 2030.
AAFF wants Congress to make the Energy Information Administration require regular data collection of this information.
EIA announced voluntary pilot studies in March. That pilot program covers just 196 companies.
“Congress should make this collection broader and more permanent,” Dayaratna wrote.
The Bipartisan American Affordability and Jobs Act of 2026 includes a reporting requirement. Senators introduced it last month.
Section 2114 would make power companies report how much electricity data centers use. Data centers wouldn’t have to file any new reports.
AAFF also wants states to let private utilities use separate power grids to serve data centers.
The power company and its customers would negotiate prices and finance their own systems. They would still have to follow environmental, siting and safety laws.
Dayaratna says this would protect other utility customers from paying for infrastructure upgrades to benefit data centers.
The paper says charging data centers higher electric rates could help, but they would still use the same power grid as everyone else.
AAFF also wants to make it easier and faster to build power plants and connect them to the grid. It supports using different energy sources without any emissions rules.
The group doesn’t want to ban new data center construction, it says. It wants states to fix power supply shortages and make adding more electricity to the grid easier.
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