House passes Ratepayer Protection Act requiring 100MW data centers to pay full grid upgrade costs

The U.S. House of Representatives has passed H.R. 9340, the Ratepayer Protection Act, which establishes a federal standard for utility cost allocation. The core mechanism of the bill is a mandate that data centers with a capacity of 100 megawatts or more must pay the full incremental cost of any generation, transmission, or distribution upgrades required to serve their load. This includes costs incurred if the data center terminates its contract with the electric utility or ceases purchasing energy, ensuring the infrastructure costs are not left stranded with the utility.

This legislative move directly responds to the financial impact of AI-driven demand on residential and small business electricity rates. The bill aligns with President Donald Trump’s “Ratepayer Protection Pledge,” which sought commitments from AI hyperscalers and utility providers to cover their own electricity demands. The urgency stems from widespread opposition to data center developments in local communities, driven by surprise price hikes for non-industrial users that have become a primary political issue.

The path to implementation is not immediate or guaranteed. The bill must still pass the Senate and receive presidential signature before it becomes law. Even after enactment, the federal standard is not automatically imposed; instead, it directs state regulatory authorities and non-regulated electric utilities to consider adoption within two years. This creates a potential gap where temporary state-level bans or moratoriums on data centers could expire before the federal standard is formally adopted by state regulators.

Existing state-level actions provide context for the federal bill's stringency. Oregon’s 2025 POWER Act, for instance, imposes a lower threshold of 20 megawatts for cost recovery, which has already resulted in a 30% increase in data center electricity bills and a 1.3% reduction in residential power costs. Virginia has similarly required data centers to pay for transmission infrastructure following its governor’s signature on the Ratepayer Protection Pledge in July 2026. These state precedents suggest that the federal 100-megawatt threshold may be less restrictive than some existing local regulations.