Rappahannock News

Are Virginia ratepayers, residents subsidizin­g the data center industry?

- Chris Miller is president of the Piedmont Environmen­tal Council in Warrenton. This column rst appeared in the Virginia Mercury.

Governor Glenn Youngkin’s Jan. 20 announceme­nt that Amazon Web Services plans to spend $35 billion to establish multiple data center campuses across Virginia was not welcome news for all. Here’s why: it seems that Virginia is chasing an initiative that will require our energy system size to double or triple, with ratepayers footing the bill.

Data centers are massive users of electricit­y. A December 2021 Virginia Department of Energy report projects that data centers will drive nearly all future electricit­y load growth through 2045, while combined electricit­y demands from every other sector (residentia­l, industrial and non-data center commercial) would stay level or decline. Data centers’ enormous appetite for power would require dramatical­ly increased power generation and associated infrastruc­ture, such as new transmissi­on lines and electrical substation­s. Who would pay? Virginia ratepayers, of course.

What sort of numbers are we talking about? In Loudoun County, a proliferat­ion of data centers has led to capacity and reliabilit­y issues with the power grid currently supporting its “Data Center Alley.” As introduced, House Bill 2482 and Senate Bill 1541 would e ectively label $627 million of emergency transmissi­on upgrades to address those issues as “an ordinary extension or improvemen­t,” removing oversight by the State Corporatio­n Commission for a project that will ultimately be rate-based. And that’s just one cluster; the energy transmissi­on infrastruc­ture cost required for a new round of data center expansion would run in the billions.

The very last paragraph of the governor’s press release mentions the creation of a “Mega Data Center Incentive Program.” This program would give Amazon “up to a 15-year extension of Data Center Sales and Use tax exemptions on qualifying equipment and enabling so ware,” and “up to $140 million for site and infrastruc­ture improvemen­ts, workforce developmen­t, and other project-related costs.” HB 2479 and SB 1522 appear to set up the framework for the program. This money isn’t falling from the sky; it comes in the form of lost tax revenue for municipali­ties or the state, or as a direct subsidy paid by Virginia taxpayers.

Data centers are a modern reality and can be a valuable source of economic developmen­t. But when you take a hard look at the gross costs associated with these facilities, which include not only ratepayer-funded energy expenses but also largely uncompensa­ted impacts to land, water quality and supply, and local residents, we have to pause and ask serious questions. Most importantl­y, who is bene ting and at what cost to Virginia taxpayers and ratepayers? This is why The Piedmont Environmen­tal Council and a coalition of Virginia organizati­ons are supporting SB 1078 and Senate Joint Resolution 240, which require review of water usage and carbon emissions and a statewide study of the impacts of data center developmen­t on Virginia’s ratepayers, environmen­t, economy, energy resources and ability to meet carbon-reduction goals.


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