House Passes Bill Requiring Large AI Data Centers to Fund Grid Upgrades

New Federal Standard for Data Center Costs

The U.S. House of Representatives has passed H.R. 9340, known as the Ratepayer Protection Act. This bill amends the Public Utility Regulatory Policies Act of 1978, establishing a federal standard that requires large data centers to cover the costs of electrical grid improvements necessitated by their operations. If signed into law, state regulatory authorities and non-regulated electric utilities will be required to consider adopting this standard within two years.

Mandatory Contributions for Grid Infrastructure

Under the provisions of H.R. 9340, data centers consuming 100 megawatts or more of power will be responsible for the full, incremental cost of any generation, transmission, or distribution upgrades needed to serve their load. This includes situations where a data center terminates a contract or ceases purchasing electricity from a utility. The measure is a response to President Donald Trump’s "Ratepayer Protection Pledge," which sought to ensure AI hyperscalers and utility providers bear their own electricity-related expenses.

Addressing Consumer Impact

The legislation directly addresses concerns over surprise price hikes experienced by residential users and small businesses, which have been attributed to the substantial electricity demands of AI data centers. These price increases have contributed to growing public opposition to data center developments in communities across the country.

Precedent from State-Level Actions

Oregon previously enacted the POWER Act in 2025, which requires developments using over 20 megawatts to pay their share, resulting in a 30% increase in data center electricity bills and a 1.3% reduction for residential power costs. Virginia also followed suit after its governor signed the Ratepayer Protection Pledge in July 2026, with the State Corporation Commission mandating data centers pay for all required transmission infrastructure.