Alaska House panel hears bill to shield ratepayers from data center costs

The Alaska House Community and Regional Affairs Committee heard testimony Monday on legislation that would prevent data centers from shifting infrastructure costs to residential electricity customers.

Senate Bill 250 would prohibit data centers from passing costs for transmission lines and other infrastructure onto residential ratepayers. The bill comes as Alaska weighs proposals for large-scale data center development, including a 1-gigawatt facility on the North Slope that would exceed current demand across the entire Railbelt grid.

Senator Tobin, the bill sponsor, told the committee the measure aims to create guardrails for negotiations between data centers and utilities. Tobin said the Trump administration proposed a rule earlier this year requiring data centers to pay for their own transmission infrastructure rather than having ratepayers foot the bill.

This was the first House hearing on SB 250, which was referred from the Senate. The committee planned to hear bill introduction, invited and public testimony, and consider possible amendments.

Committee Co-chair Donna Mears noted the scale of potential development. Current Railbelt demand totals about three-quarters of a gigawatt, she said.

Mears cited public resistance to a Terra Energy proposal in the Matanuska-Susitna Borough as evidence that Alaskans want consumer and environmental protections in place before data centers arrive.

Independent energy analyst Erin McKittrick testified that data centers are so large they can break the traditional incremental-load rate model. The way electricity rates are designed is based on a history of incremental load growth, where load grows slowly across lots of different sectors, McKittrick said. Data centers are so big that they break that model, and their load growth can end up making electricity more expensive for everyone without new forms of consumer protection, she said.

The bill drew mixed reactions from committee members. One committee member said the legislation appeared overly prescriptive for local utilities and cooperatives that already have negotiation processes in place. The member said he wanted testimony from utilities in his district, which stretches from the Matanuska-Susitna Borough to Valdez, before the committee moved forward. Multiple members noted that existing utility negotiation processes already handle large commercial or industrial loads.

Another committee member raised concerns that the bill could discourage data centers from locating in Alaska, but noted that data centers could serve as anchor tenants for new power plants that would eventually benefit all ratepayers by spreading out costs and driving rates down.

Senator Tobin defended the bill as a framework to prevent project cancellations driven by community backlash. Tobin cited a document showing $64 billion in data center projects have been blocked or delayed nationwide due to local opposition.