Essentially everyone agrees: Americans shouldn’t pay higher electric bills to feed AI data centers’ insatiable demand for power. But what will it actually take to prevent cost spikes?
Lots of states have decided the answer is a “large load tariff” — an unsexy term that basically translates to special utility rates and requirements designed for huge energy users, like data centers.
As of late 2025, more than 65 such tariffs have been proposed or approved in over 30 states, according to data tracked by the Smart Electric Power Alliance and the North Carolina Clean Energy Technology Center.
These efforts are largely trying to solve the same problem: The explosive growth of AI data centers is outpacing utilities’ ability to build power plants and upgrade the grid. If data centers don’t show up and stick around to buy all the power that’s justifying those investments, other customers could be trapped paying them off for decades to come.
This puts enormous pressure on regulators to “hold the line on ensuring that these large-load customers carry the costs that they bring,” said Jay Griffin, executive chair at the Regulatory Assistance Project. The nonprofit last month launched a report series to help regulators and policymakers navigate these complexities.
The trend of states adopting data center–focused large load tariffs began to take off in 2024, led by early movers like Ohio and Indiana. More such tariffs were approved in Kansas, Michigan, and Virginia last year, and now Illinois and Wisconsin are debating their own proposals. With roughly a year and a half of data on how different states have tackled the problem, “there’s enough time and transparency into decision-making that commissioners are able to make appropriate decisions,” Griffin said.
Progress is decidedly mixed, said Louisa Eberle, a senior associate at the Regulatory Assistance Project who co-wrote its first data center report. “Some are just getting started. We haven’t reached full ‘best practices’ anywhere — but we have found better practices.”
Those start with contracts requiring these giant new customers to pay a minimum amount of money for power for a set period — usually 10 to 15 years — whether or not they end up being built or staying open that long. This offers some insurance against data centers pulling out and leaving customers at large holding the bag, although some advocates fear those terms aren’t lengthy enough to cover the cost of power plants and grid investments, which must be paid off over decades.
Some tariffs also lay out what kind of power such massive customers must use — namely, clean energy. These can match up nicely with both state climate targets and the clean energy goals of the tech giants, like Amazon, Google, Meta, and Microsoft, that are driving the AI boom — although plenty of utilities and data center developers are going big into fossil gas–fired power as well.
And on the cutting edge of large load tariff policy, some utility regulators are asking data centers to “bring their own” generation or grid capacity, Eberle said. The idea here is to make developers play a more active role in sourcing and contracting for new energy resources for their computing facilities. That might not be utilities’ favorite option, since it cuts into the profits they earn from investing in power plants and power lines. But it’s an opening for data center developers willing to pay a premium to get onto the grid faster.
These negotiations aren’t easy, Griffin said. Tech companies are asking utilities to invest billions of dollars to serve power demand equal to that of entire cities springing up on their grids over just a few years. The sheer scale and speed of the boom have overwhelmed regulatory processes built for slow and low growth.
As the former chair of the Hawaii Public Utilities Commission, Griffin knows that regulators are constantly balancing the risk of letting utilities build too much power with the risk of preventing them from building enough. The former threatens to burden customers with unnecessary costs, while the latter can constrain economic growth and even endanger grid reliability.
Right now, public opposition to data centers is squarely focused on the financial and environmental dangers of overbuilding. Laws passed in Minnesota, Oregon, and Texas last year, and bills being debated in states including Florida, Georgia, Illinois, Virginia, Washington, and Wisconsin, propose everything from stripping tax breaks for data centers to imposing full-on construction moratoriums.
However, data centers that cover their costs and finance more-sustainable resources could help in “reducing cost for everyone,” Griffin said, both by increasing utility revenues to cover shared expenses and by pushing “innovation for emerging technologies,” such as virtual power plants and on-demand clean energy resources like geothermal power. Tech giants “have the demand for power and the need for speed to drive those in a way we’re probably not going to see for another generation,” he said.
The limits of large load tariffs
While no two large load tariffs are exactly alike, many share common characteristics, as think tank RMI highlighted in a November review.
About a third of the 65 large load tariffs on deck as of late 2025 require big customers to make minimum payments over a set period of years, whether or not they remain operational over that time. More than half include some form of collateral requirements or other credit risk protections. And roughly half require large customers to pay fees if they exit their contracts early.
These requirements can help cull the speculative data center proposals now crowding utility interconnection queues, whether from companies with projects that are highly unlikely to win financing or from major developers “shopping” single projects across multiple utility territories. American Electric Power’s Ohio utility, for example, saw its large load pipeline drop from 30 gigawatts to 13 gigawatts after it instituted a large load tariff last year. In that sense, “not only do strong tariffs help protect customers, they also help the utility in forecasting what’s coming,” Eberle said.
But the tariffs might not be sufficient to pay off the cost of power plants and grid investments that last for decades, said Ben Hertz-Shargel, global head of grid edge at research firm Wood Mackenzie. Last year, he ran an analysis that found none of the large load tariffs on the books at that time were sufficient to fully recover the cost of new gas-fired power plants that would need to be built to serve big energy users.
The scale of fossil fuel build-out being contemplated to serve the high side of the AI bubble would be ruinous on both cost and climate terms. The Sierra Club is tracking a startling 248 gigawatts of gas-fired power plants being planned across the U.S. as of the first quarter of 2026, nearly five times the amount planned in 2021. Data center expansion is the primary driver of that increase, including for build-outs planned in Georgia, Louisiana, and North Carolina— states that have yet to impose large load tariffs.
“There are some utilities that are starting to creep up and charge for what it takes to build a new power plant today,” Hertz-Shargel said. “But it’s still uneven.”