Cotton introduces bill to shield Arkansans from data center-driven electric rate hikes

LITTLE ROCK, Ark. (KATV) — Sen. Tom Cotton, (R) Arkansas, has introduced a new bill that aims to protect Arkansans from increases in electric rates caused by energy-hungry data centers.

“Data centers suck up a huge amount of electricity, in some cases as much as small towns. If that electricity is just coming from the power generation we have on the grid that is powering our homes and our farms and our factories and our business places, then of course there’s going to be a price spike,” Cotton told KATV.

Just this week, a new, multibillion-dollar data center project in the Little Rock area was announced. The company behind it, AVAIO Digital, says fully built out it would pull a gigawatt from Arkansas’ grid, over five percent of the state’s total electric capacity (roughly 18 gigawatts).

That demand would require new power generation, the cost for which may be passed on to residential ratepayers.

AVAIO’s data center is just the latest. Google is building a similarly massive facility in West Memphis. To help power it, Google has contracted with Entergy to build the $1.6 billion Cypress Solar Project.

Aside from the costs associated with recent replacements or upgrades for aging power plants, the Arkansas Public Service Commission says that massive power demanded by incoming data centers is a contributor to rising electric rates.

“Data centers use a uniquely large amount of electricity. And that’s both because of their large demand, but also because they’re using that maximum demand 24 hours a day. We do know that they’re contributing to our current need to build new generation. Any time that you have to build new generation, costs are going to go up,” Danni Hoefer, chief of staff at the Public Service Commission, told KATV.

Last week, Cotton filed the “DATA Act” to address exactly that issue.

As the federal government tries to accelerate the development of data centers around the country amid a global AI arms race, lawmakers recognize that it must be balanced with affordability for residential consumers. States like Ohio and Virginia, where many data centers are already in operation, have seen 12 to 13 percent rate increases — in Ohio, that’s on average $16 a month more on residential bills, according to the Pew Research Center.

“The DATA Act tries to balance two important priorities. One is keeping electricity prices affordable for Arkansas families. Two is encouraging investment in data centers across the state of Arkansas and making sure that we maintain our lead against communist China when it comes to artificial intelligence, quantum computing, and other advanced technologies that require data centers and on which our future security and prosperity will depend,” Cotton told KATV.

Cotton’s legislation would allow data center operators to fund and build their own off-grid power plants to meet their needs. Those power plants wouldn’t be subject to the same federal regulations as public utilities either.

“That power doesn’t go onto the grid — it stays at the side of those data centers and powers them. That means that all the supply that we have or that’s currently being built in our electric system is going to be there for your home, for your business, for your farm, for your factory. And prices will remain affordable while we also encourage investment in the cutting-edge technologies that will keep us safe and prosperous for the future.”

Cotton says Trump has indicated his support for the bill’s aims.

“You saw President Trump endorse this concept just a few days ago. He said that we have to dominate the race for artificial intelligence and quantum computing, but we have to keep electricity prices affordable for all Americans,” Cotton said.

The DATA Act isn’t strictly limited to data centers, though that’s its main focus, but in principle would allow other power-hungry industries to build their own off-grid power plants as well.

In a statement to KATV, the Electric Cooperatives of Arkansas said:

[We] share Senator Cotton’s commitment and appreciate his leadership in preventing data centers and similar high-usage energy projects from increasing electricity costs for residential consumers across Arkansas. Protecting electric cooperative members from undue rate impacts is a top priority. The cooperatives believe the best path forward involves close cooperation among utilities, legislators and industry to make thoughtful, inclusive decisions that deliver reliable power and economic benefits for Arkansans.

The Electrical League of Arkansas also provided KATV the following statement:

The Electric League of Arkansas (ELA) is excited about the continued growth of our state’s digital and physical infrastructure. Whether it’s a new data center or local community expansion, our members are dedicated to ensuring that Arkansas has the reliable, safe, and robust electrical foundation necessary to power the 21stcentury economy.

The ELA applauds the attention being given to the future of our state’s energy landscape. We remain committed to working with policymakers, utilities, industry partners, and community stakeholders to ensure that Arkansas continues to grow in a way that is sustainable, equitable, and aligned with our shared long-term interests.