Dive Brief:

• Fully off-grid power suppliers would be exempt from Federal Power Act and U.S. Department of Energy regulations under a bill introduced Thursday by Sen. Tom Cotton, R-Ark.
• “The DATA Act of 2026 will eliminate outdated federal regulations and enable manufacturers, data centers, and other energy-intensive industries to build customized electricity systems without impacting existing power grids,” Cotton said in a press release.
• Utilities will likely oppose the bill, according to Mike Jacobs, senior manager for the Union of Concerned Scientists’ energy program. “The threat to utilities’ growing revenue is obvious,” he said. “Perhaps they can all make an arrangement, which would require state approval in each case, in each state.”

Dive Insight:

The bill comes amid growing concerns about how data centers can increase electric rates for other consumers through higher capacity, transmission and other costs.

The bill would allow for the creation of ‘‘consumer-regulated electric utilities,’’ or CREUs, that could provide retail service to new electric loads as long as their system is physically isolated from the bulk power grid and other utilities. The CREU’s customer would also be physically islanded from the bulk power system and could not use the grid for backup power.

The bill exempts the CREU from Federal Energy Regulation Commission oversight, including for rates, reliability and regional transmission planning and cost allocation. The CREU would also be exempt from the Public Utility Regulatory Policies Act and the Public Utility Holding Company Act.

The exemptions end if a CREU opts to connect to the grid. The bill also would not exempt the CREU or its customers from environmental and zoning laws and permitting requirements. 

This bill would let data center developers do what they say they want — prevent their cost and reliability impacts from affecting the public, according to Jacobs.

“However this development goes, and what problems it causes for the data centers, it’s their job and not the public utility’s,” Jacobs said Monday in an email. “Good for the public, good for the extremely confident developers.”

The Data Center Coalition didn’t immediately return a request for comment on Cotton’s bill.

Cotton’s bill is akin to legislation signed into law last summer by New Hampshire’s Republican Gov. Kelly Ayotte. That law exempts off-grid power providers from the state’s utility laws.

The state law received mixed reactions. 

Some hailed it as an “elegant solution” to increase competition and innovation in the face of new capacity challenges.

But others are skeptical, noting the law’s narrow scope.

Most providers and customers want grid backup, energy consultant Rao Konidena wrote in an assessment of the law. And if it does succeed in luring large loads off the grid into bilateral agreements, that could shift fixed costs onto residential and small business customers and undermine the state’s stranded cost recovery rule, he said.