Are data centers raising your energy bill? WA lawmakers want them to pay

Washington state has sought to grow as a hub for data centers, but now state lawmakers are considering setting new requirements for them.

Data centers are physical facilities that hold various IT infrastructure to process, store and deliver data for various purposes including artificial intelligence, streaming services and online banking.

Such centers can generate sizable revenue and job growth for the communities that call them home – but concerns have begun to bubble up about their implications for local electricity rates and the surrounding environment.

State Rep. Beth Doglio, an Olympia Democrat, is the primary sponsor of House Bill 2515. During a Jan. 22 hearing on the bill, she said that lawmakers are confronting the possibility of significant demands on the state’s water, communities and power grid.

“These policies seek to protect ratepayers by ensuring new data centers are picking up the whole tab for new growth, protect against stranded assets, ensure grid reliability,” Doglio told the House Environment & Energy Committee, which she chairs.

There are more than 100 data centers in Washington state, which ranks among the top 10 nationally, according to the website Data Center Map.

Washington has worked to attract more data centers to the state by providing tax incentives. Yet 2024 reporting by the Seattle Times and ProPublica showed that the state’s courting of data centers has conflicted with its ambitious clean-energy goals.

Gov. Bob Ferguson launched a workgroup last year examining how data centers affect the state’s economy and environment.

The group’s preliminary findings, released last month, suggest that the state has work to do when it comes to meeting burgeoning power demands. They also highlighted “potential impacts” regarding water resources, and recommended shielding ratepayers by ensuring that data centers foot the bill for full energy-system expenses.

Doglio’s proposal would, in part, set new requirements for data centers. They would need to report on their energy and water use, with new or expanded facilities meeting certain thresholds for using electricity from nonemitting electric generation or renewable resources. Data centers would also pay the Department of Revenue an annual fee to deposit into a new account, with proceeds split between energy- and higher education-related purposes.

A preliminary fiscal note projects that in the fiscal 2027-29 biennium, $46.4 million would be generated from the annual fee, legislative staff said at the hearing. That number is estimated to come in at $67.7 million in the following biennium.

Data centers in Eastern Washington communities in particular, including Quincy and East Wenatchee, have led to rising local property values, job creation, funding for public infrastructure and declining levy rates, the governor’s workgroup found.

The Tri-City Herald reported in November that the Tri-Cities has received three data center proposals in the past year, any of which would mark the first facility in or near that area.

Republican state Rep. Alex Ybarra said during the hearing that data center-related water issues aren’t a concern in Quincy, which he represents. Despite 85% of its residents living in poverty, the city is home to the third-cheapest electricity in the U.S., he added.

Logan Bahr with Tacoma Power/Tacoma Public Utilities testified in support of HB 2515, which he said would help protect consumers. He also said the bill would set clear guidelines for new large-energy users.

“These same principles guided Tacoma as we implemented our large-load rate in 2024 that ensures new high-demand customers are accountable for the impacts they have on the system,” Bahr said.

The measure also saw support from climate and environmental advocates who argued that the bill would help safeguard clean air, water and salmon. Others want to see data centers report on energy use to better understand the toll on the power grid.

By 2030, the Northwest’s power supply gap is forecasted to hit close to 9 gigawatts, sparking concern about potential energy shortfalls, McClatchy previously reported

Some in the business community voiced their opposition at Thursday’s hearing.

Peter Godlewski with the Association of Washington Business noted that Grant County saw a 131% spike in tax revenue between 2005 and 2024 thanks to the data-center sector.

Tom Pierson, interim president and CEO of the Tacoma-Pierce County Chamber, said past legislation authorizing data center tax preference for Pierce, King and Snohomish counties. Before then, a data center in Puyallup had sat vacant for 13 years, he said, but today it counts some $200 million in investments – with tax dollars returning to the local economy.

“Data centers are not theoretical investments,” Pierson said. “They’re proven infrastructure.”