Amid data center boom, Delaware lawmakers want to protect residents from electricity rate hikes

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Delaware lawmakers have advanced legislation that aims to protect ratepayers as the increasing demand for data centers threatens a surge in electricity rates.

House Bill 233 would require utility companies like Delmarva Power to create a separate, higher electricity rate for large energy-use facilities, including data centers. The goal is to prevent the technology industry from passing on infrastructure costs to residential customers.

The bill is being debated amid growing concerns about mega-scale data centers, including a proposed 1.2-gigawatt facility in Delaware City that would span 6 million square feet.

During a committee hearing Wednesday, lawmakers voted to advance the measure for a chance to be heard on the House floor. The bill’s sponsor, state Rep. Frank Burns, D-Newark, said he believes the legislation will offset the consequences of increased strains on the grid.

“I can’t tell you for sure that if we just let this industry go forward that it will triple everyone’s electric bill, but I certainly can’t tell you that it won’t,” he said. “I just want to make sure that our rate payers are protected.”

Data centers house the computer servers required to run internet services worldwide. While they have been around since the mid-20th century, the acceleration of power-hungry artificial intelligence has boosted demand for larger sites and more resources. Last year, the Trump administration announced plans to accelerate AI development with limited regulatory oversight.

Data center proponents are touting the prospect of increased tax revenue and job creation. However, as utility bills continue to soar in the region, residents are concerned that a strain on the power grid could mean higher electric bills.

Data centers use a significant amount of energy, and as AI requires more power at a faster rate than typical internet services, data centers often strain the power grid, leading to increased electricity rates for consumers.

PJM Interconnection, which manages the region’s electrical grid, has pointed to the increase in data centers as a reason for strains on the grid.

Though a 2023 Department of Energy study said data centers amount to less than 5% of annual electricity use in the U.S., the same report indicates data centers will consume 6.7% to 12% of total U.S. electricity by 2028.

The legislation would require the Public Service Commission to consider ratepayer impacts when determining whether to approve a rate application from utilities. The commission would also have to consider whether rates provide for equitable contributions to grid efficiency, reliability and resilience.

Some Republican lawmakers said during the hearing that they are concerned the legislation could drive businesses out of the state.

“We’re putting up another sign that says, ‘Delaware is not open for business,’ and if we continue to do this, then we hurt everybody. We hurt the schools. We hurt low-income wage earners. We hurt tradespeople. We hurt engineers. We hurt scientists,” said state Rep. Jeff Hilovsky, R-Long Neck.

Environmentalists and residents spoke in favor of the legislation, arguing that the technology industry should foot the bill for its substantial energy use.

“Families, young people just starting out, the elderly and small businesses can’t afford more rate hikes,” said Richard Trask of the Delaware Sierra Club. “Should Delaware families be paying higher energy bills to subsidize the schemes of multi-billion-dollar out-of-state corporations to rake in more billions for themselves? That’s really not right.”

The legislation now awaits a vote on the House floor.