Aired Aug 4, 2026 · 15 min

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Today’s episode of Power Perspectives tackles one of the most contentious issues in the energy industry today: should states slow or even pause the rapid expansion of AI data centers?

Energy Central’s Molly Glick and Carrie Klein break down New York's first-in-the-nation temporary data center moratorium, why more than a dozen states are considering similar policies, and the arguments on both sides of the debate. The conversation explores concerns over rising electricity costs, grid reliability, water use, and whether ratepayers should bear the cost of powering AI infrastructure. At the same time, they examine the economic benefits data centers can bring through jobs, investment, and innovation.

Whether you're for or against data center moratoriums, this discussion offers a balanced look at one of the biggest policy debates shaping the future of AI and the electric grid.

Molly Glick: Is it the right time to be slowing data center growth? On July 14th, New York State enacted the country's first data center ban.

Carrie Klein: All of this is happening as ratepayers face high prices everywhere, and data centers are directly tied to those high energy bills.

Molly Glick: Should moratoriums happen at all? Who benefits and who loses out?

Carrie Klein: Moratoriums are one really clear way to add more protections, or at least give states the time to pass more stringent data center policies. Some critics are arguing that stopping data centers in their tracks right now is a huge mistake.

What do you think will happen next? Will more states or even the federal government enact a ban?

Molly Glick: Are data center bans a mistake or are they exactly the kind of pause that the U.S. grid and communities need?

Today, we're digging into a controversial topic that's probably dominating your LinkedIn feed, data center bans. On July 14th, New York state enacted the country's first data center ban. And the reactions were all over the map, just like, well, data centers. During this temporary ban, which halts construction of data centers over 50 megawatts for up to a year, Governor Hochul is directing state officials to develop environmental standards for future data centers. And it's not just New York getting out on the action. As of July 1st, there were 15 states considering banning data centers. So some critics, like tech industry groups and construction unions, say that New York's ban went too far. But others, like consumer advocates, say it didn't go far enough. So clearly not everyone is aligned. And where does that leave us for future state or even federal bans?

I'm Molly Glick with the Power Perspectives podcast, and today I'm joined by Carrie Klein. Hey Carrie, how's it going?

Carrie Klein: It's going well. I'm excited to talk about data centers.

Molly Glick: Awesome. So why don't we just dive right in? First, let's start with a major sticking point that people are really butting heads over right now. Is it the right time to be slowing data center growth?

Carrie Klein: It's a great question. So all of this is happening as ratepayers face high energy bills, high gas prices, and really high prices everywhere. And data centers are directly tied to those high energy bills. Plus, they're taking up local resources like water and polluting local air. So the benefits of data centers to customers are not really clear.

Until now, data centers have pretty much been growing unchecked and actually incentivized. 38 states have some kind of tax breaks for these facilities. People are upset and some lawmakers are starting to reverse course. And as for the flip side, some critics are arguing that stopping data centers in their tracks right now is a huge mistake. They claim that they could halt innovation like the development of life-saving drugs or just things we rely on every day like credit card payment or streaming.

Molly Glick: So let's zoom out and think about the long game. Should moratoriums happen at all? Who benefits and who loses out?

Carrie Klein: So the worry about building out data centers is if they require all this new power, who is going to pay for it? Without proper protections, residents could be on the hook for those costs, on top of the bills they're already paying to keep the lights on and the AC on. So moratoriums are one really clear way to add more protections, or at least give states the time to pass more stringent data center policies.

Molly Glick: So, Carrie, to push back here, some people say that these bans, critics, including President Trump, think they'll cost investments, tax revenues and jobs, you know, taking all those benefits from states. And there's also developers who have already invested millions, if not billions, in these facilities. But I was wondering, what is the impact on a regular resident of these communities when a data center moves in?

Carrie Klein: Here's what a study out of Georgia Tech found. When a data center opens, a county's employment rate increases on average by roughly 3.5 percent. Wages go up 5 percent. Business establishments increase by nearly 5 percent. And household income goes up by around 2 percent. And as Georgia Tech notes, metropolitan areas capture most of the economic benefits from data centers. But there's a lot less of these for rural areas.

Molly Glick: Yeah, it's super interesting to see where these benefits actually roll out, especially around jobs and wages. So if data center bans don't pan out in more states, what's a good alternative that would address some of the concerns that we've talked about?

Carrie Klein: Yeah, that's a great question. I think that people who are critics of the ban say that states can instead do some rules to ease the strain on the grid and also ease the strain on ratepayers' pockets. So some states are suspending tax incentives. Yeah. Minnesota, Arizona, Illinois, and Ohio have already rolled back or paused their data center incentives.

In Pennsylvania, they're going a different route. With a recent law, data centers over 10 megawatts must report their annual energy and water usage to the state. Virginia, meanwhile, recently implemented an energy tax on data centers. And as our listeners may know, utilities around the country have proposed or rolled out over 100 tariffs and rules for large load customers like data centers. And a lot of these aim to prevent cost shifting onto ratepayers.

Molly Glick: Carrie, you were talking about another alternative to bans. Can you elaborate on that?

Carrie Klein: Yeah, so something else we're seeing happen are called community benefit agreements. These are legally binding contracts between project developers and the communities they're building in. So this could look like developers agreeing to offer specific benefits like job training, housing assistance, or direct payments to local funds to make these projects more appealing. Something interesting that just happened in New Jersey is there's a first-of-its-kind law where data centers can offset their energy use by paying for households to get things like electric heat pumps or batteries, things that reduce their energy cost. I think this is a really interesting potential way to balance out the energy load that they're adding, and it'll be interesting to see if other states adopt something similar.

Molly Glick: Yeah, I think that's a really cool incentive to basically appease all the different groups here. So, of course, as with any kind of debate, we have to ask what our readers think. As proposed and enacted bans made headlines in recent months, we ran some polls in the newsletter. Carrie, what did our daily readers think of state data center moratoriums?

Carrie Klein: Okay, so in a poll that we did of our daily readers in July, we found that 34% are against a state data center moratorium, 32% are for it, and 34% have a different idea.

But what do our readers think about a national ban? There's a little more resistance there, according to a poll we did in March. 40% think that's an overreach. 36% said it's necessary right now. And 24% said it depends on how things play out. And our readers had some pretty interesting arguments either for, against bans, or for their completely different solutions. So one reader drew this interesting parallel that really stood out to me. They compared what's happening with data centers to what's happening with solar arrays. Some lessons could be learned there, they said. Many times, rejection from the community stems from misinformation, misunderstanding, and a lack of communication. So this is what they propose. Honest engagement between the developers and the community should precede efforts to build.

Molly Glick: That makes sense. What other responses stood out to you from our readers?

Carrie Klein: Yeah, definitely. Transparency is huge, so totally understand that comment. Another response that stood out was this one. A reader said, There are many unknowns about data centers. My fear is they will be overbuilt, and communities will be left with large, vacant buildings in a few years as technology improves and less space is needed.

Molly Glick: And that's a pretty interesting point because it really is hard to forecast the demand when so many projects are piling up in queues. And it's not we're not totally sure which ones are going to play out, which ones aren't actually going to be built. This winter, PJM had to dial back its load growth forecast through 2032 due to stricter vetting of data center projects. So that's something we're already seeing happen.

Carrie Klein: Yeah, definitely. I think that that's a really big criticism you see from a lot of people in and outside of the energy world. Can we trust all of these plans that keep piling up from developers or are these just going to be broken promises and the grid spending? Is that going to add to ratepayer bills without anything actually getting built?

Molly Glick: Well, I think one thing is for certain. The Energy Central community seems to be more divided than the general public in the U.S. In the bigger picture in the U.S., data center bans seem to be one of the few things, besides nuclear, that Democrats, Republicans, and even independents can largely agree on.

In a June poll by Data for Progress, which had just over a thousand U.S. respondents, 67 percent of Democrats said they support a countrywide ban lasting at least a year. And 58 percent of Republicans said they support such a ban. We even had 66 percent of third party or independent voters support this kind of ban, too. And as we know, they don't really love government meddling. So, Carrie, why do you think it's the case that the Energy Central community is more divided over this issue than the U.S. as a whole?

Carrie Klein: People in the energy industry have a closer connection to what's going on in a different way. Some people are taking the approach that data center load could be a good thing because it's something that could bring more power flexibility to the grid. For example, it's a huge load, but it can super quickly be taken offline when needed or added back on. But others in the energy community are against them because those data centers might not be paying for the added generation and the added transmission costs that they need. And those costs could then be passed on not only to customers, but also to utilities.

Molly Glick: Yeah, that's the kind of thinking I see a lot in the comments on our website. I think a lot of people have that concern. And I hear the refrain time and time again from Energy Central folks that data center developers should be shouldering these costs all on their own. But that's really what the national movement is saying. You know, we were seeing the Ratepayer Protection Act that just went into the broader House of Representatives. And that's the goal for that bill is to put all of these costs onto developers.

Carrie Klein: Yeah, and that's getting bipartisan support. So it's a really unique issue. So, Molly, what do you think will happen next? Will more states or even the federal government enact a ban?

Molly Glick: Well, first, let's talk about states. I think it could happen in more states. But one thing I want to clear up that maybe gets left out of some coverage, New York did not have a huge pipeline of data centers in the state in the first place that wanted to come to the state. It ranks pretty low in terms of data center pipelines. Actually, the top of the list is Virginia, Texas, and Georgia, which some of our listeners might already know. I think that seems unlikely because I'm not sure if the officials there would even consider disrupting the booming industries. As for a federal ban, I'd be very surprised if that got through Congress or passed the White House, just given the White House's insistence on supporting the AI revolution in the U.S.,

Carrie Klein: Yeah. So far, what we're seeing on the federal level is a lot more voluntary pledges. President Trump has pushed these ratepayer protection pledges where data center developers and utilities can choose to sign something saying they will take on the costs of the energy they're building out. But we know that that's not binding. So it's a lot easier to put forward something like that than actually pass a law.

Molly Glick: Yeah, as I called it in the newsletter, I think of those as pinky promises. I will say that the real purpose of the Ratepayer Protection Act that I mentioned earlier is to codify the White House's Ratepayer Protection Pledge into law. And some people say that the Ratepayer Protection Act doesn't do enough. Is it actually still voluntary, though? The Ratepayer Protection Act creates this federal standard that state utility commissions are forced to consider. However, that doesn't mean that a certain state like Virginia is going to go along with it and really put all of the costs onto data centers for them to come onto the grid. So, Carrie, what is your takeaway? I know we spent this discussion looking back and forth at both points, you know, from those broader groups' perspectives. But what do you think is ultimately the solution? Pro or anti-moratorium? Are you pro something else? What have you been thinking about?

Carrie Klein: Yeah, I mean, I think we're in a really interesting moment. I don't think it's surprising that we're seeing proposed data center bans. The public opinion on this is across the board pretty negative, especially in communities that are seeing data centers pop up right where they live. There are concerns about health when data centers have to bring on backup power, which are most often diesel generators, which come with a lot of pollution. That's not popular for anyone living in that community.

So when we're seeing a state like New York pass a data center ban, which is only for a year, it may not be as big of a statement as you might think at first. Because like you said, there's not a huge pipeline of projects coming in. I would be more surprised and more interested to see states that have more of an economic stake in data center development pass this either moratoriums or more protections. But right now, it's such a new thing that there aren't a lot of regulations around this. So I think ratepayers are really kind of left unprotected. And seeing at least some more policies come out around this would help customers feel more secure about how their energy bills might change in the future, especially as they're already paying more and more.

Molly Glick: Yeah, definitely. That's a great point. I think that one thing that I'm excited about amid all of this discussion is the possibility to really lean into flexibility, distributed energy resources. We have companies like Sunrun that are saying, why don't we turn homes into mini data centers? So that's a concept called edge computing, where they put computing nodes into the homes of people with solar and batteries and devices they're able to run some of the functions that these massive data centers run. And as you mentioned, the law from New Jersey, where data centers are paying for homes to upgrade energy efficiency and reduce demand, I think that in a way, this is the greatest strain the grid has ever seen. But I think it's also forcing us to be super creative and flexible. I think that makes all this a really exciting time. And I think that people are getting extremely innovative. And I'm I'm excited to see what other kind of creative solutions come next.

Carrie Klein: I'd like to see more solutions like that law in New Jersey. That's more of a long term energy solution rather than a one time payment that might make people feel better for a little bit. But ultimately doesn't doesn't bring a long term energy savings on their bills.

Molly Glick: Yeah, I think the best solutions here are things that leave the grid better off than it was before. And I think that there's plenty of things in movement right now that are going to accomplish that.