Data centers use lots of energy. Will Georgia lawmakers make them pay more?

The legislation, Senate Bill 34, was introduced by Sen. Chuck Hufstetler, R-Rome, last month and could get a vote as soon as Tuesday in the Senate Regulated Industries and Utilities Committee.

Georgia, especially metro Atlanta, has emerged as a hotbed of data center development, as companies search for cheap land and the ability to tap into power and water supplies.

By the middle of last year, data center construction had increased 76% in Atlanta compared to the same time in 2023, the most among any of North America’s eight primary data center markets, according to the real estate services firm CBRE. A January report by the U.S. Census found more than 40% of the nation’s data center employees work in Georgia and four other states.

It’s no secret the facilities, which often run 24/7, need huge amounts of power.

Many data centers demand 100 megawatts or more of electricity, and some planned in Georgia need 1,000 megawatts to keep their servers humming, according to public filings. That’s nearly equal to the maximum output of one of Plant Vogtle’s new nuclear reactors. A single megawatt, meanwhile, is enough to power several hundred homes, according to the Nuclear Regulatory Commission.

SB 34 targets the price of new energy infrastructure, power plants and fuel expenses needed to meet that demand. The bill would require that Georgia Power charge data centers themselves for any costs “substantially related to” serving the facilities, along with those that “would not have been incurred” otherwise.

Credit: arvin.temkar@ajc.com

Credit: arvin.temkar@ajc.com

Hufstetler told a packed hearing room last week he supports data centers — including several large ones planned for his northwest Georgia district. But he said action is needed to ensure other ratepayers aren’t subsidizing the power lines, substations and more needed to serve them.

“I think we all agree that consumers can’t continue to absorb costs in an unfair proportion,” Hufstetler said.

Lawmakers referenced the sharply rising bills many Georgia Power customers have already faced. Since late 2022, the Public Service Commission has approved a series of rate increases that have pushed the average Georgia Power residential customer’s monthly bill up by about $43, according to data from the company.

‘The PSC remains the best venue’

Georgia Power is banking on the state’s data center industry continuing to grow and is already making plans to serve them.

Company executives have said more than 80% of the electricity demand growth the utility expects is from data centers.

In 2023, the company made a surprising request to build new oil- and gas-burning units, add more battery storage and buy power from out-of-state coal and gas plants. The PSC, which regulates the utility, approved most of what the company asked for.

Then, late last month, Georgia Power unveiled the next phase of its plan to serve data centers. The company’s road map calls for adding renewables, plus wringing more power out of aging nuclear and hydropower plants, and keeping coal turbines open longer that it had planned to close.

The plan will be voted on in July, but the price tag associated with it has not been made public. Any rate increases will be tackled in a separate PSC proceeding set to kick off later this year.

In the meantime, the PSC has approved some changes to Georgia Power’s rules that let the utility charge data centers for “upstream generation, transmission and distribution” costs required to serve them. The changes also give the PSC staff oversight of contracts the company signs with customers that will use 100 megawatts or more of electricity.

Aaron Mitchell, Georgia Power’s vice president of pricing and planning, told the Senate committee the company opposes SB 34 because it believes the new rules greenlit by the PSC go far enough.

Data centers operators are also lining up to oppose the bill.

“The PSC remains the best venue for these important discussions and actions, particularly given their expertise in this case,” said Khara Boender of the Data Center Coalition trade group.

Credit: HYOSUB SHIN / AJC

Credit: HYOSUB SHIN / AJC

Pete Marin, CEO of Buckhead-based data center developer T5, also said he thinks the bill could harm an industry he says is creating vast economic opportunities. T5 has four data center campuses in the Atlanta area that are either operational or in development.

He compared SB 34 to legislation that passed the General Assembly last year that would have suspended a statewide equipment sales tax break for the largest data centers. But Gov. Brian Kemp vetoed the bill, saying it would be abrupt and could undermine investment.

While data centers create few jobs and strain utilities, proponents say they don’t overburden schools and roads like other industrial projects. The facilities can house hundreds of millions of dollars worth of equipment, boosting tax revenues.

“The unintended consequences of jumping to conclusions too quickly could cause the cost of energy for data centers in Georgia to go up or could slow down this wonderful economic boom that’s taking place,” he said.

Data center boom in question

Still, some questioned how long the data center craze will last — and whether the buildout to serve them is necessary.

Julian Bene, who previously served on the board of the economic development authority Invest Atlanta, pointed to the recent reveal of DeepSeek, a new Chinese-made artificial intelligence product. DeepSeek appears to have been built with a fraction of the energy and cost of its Silicon Valley competitors, raising questions about soaring projections of data center electricity demands.

Sen. Frank Ginn, R-Danielsville, seemed to harbor similar concerns.

“My biggest concern about wherever we go with building the infrastructure for data centers is that somebody comes up with a new gadget,” Ginn said.

Hufstetler, the bill’s sponsor, said he planned to get the PSC’s feedback and report back at the committee’s next hearing. As of Monday afternoon, the committee was scheduled to meet Tuesday at 4 p.m.