Permitting Reform: Independent Analyses Project $55 Billion in Data Center Fees

Data center developers would pay utilities an estimated $55 billion over the next decade under a new federal permitting bill, according to independent analyses released this week. This figure represents an additional $35 billion in revenue compared to current policies. The findings were produced by four separate nonprofit and industry groups that modeled energy transmission and production scenarios through 2040.

The studies were conducted for the Bipartisan American Affordability and Jobs Act, a proposal championed by U.S. Sen. Martin Heinrich, D-New Mexico. The legislation aims to streamline the federal permit review process for renewable energy projects. It also seeks to prevent data center operators from shifting the costs of grid upgrades to nearby residential ratepayers.

Heinrich introduced the bill in recent weeks alongside U.S. Sen. Mike Lee, R-Utah, and other bipartisan senators. Heinrich serves as the ranking member of the Senate Energy and Natural Resources Committee. He stated that the bill addresses long-standing delays that keep vital carbon-free energy projects in the planning phase for years.

The Center for Climate and Energy Solutions reported that passing the bill would lower annual electricity bills by $2.5 billion by 2035. The analysis attributes this savings to a reduction in the queue of power plants and storage facilities waiting for grid approval. Nat Keohane, the center's president, noted that costs rise when energy demand grows faster than the supply can connect to the grid.

Grid Strategies, a power sector consulting firm, evaluated the bill's specific provisions regarding data centers. The firm determined that utilities would use the additional fees to lower transmission costs for general ratepayers. The modeling projects that household electricity bills would decrease by between $50 and $78 annually by 2040.

The analyses also projected a 20 percent reduction in power sector emissions over the same period. This decrease in pollution would help prevent approximately 6,700 deaths and save $54 billion in cumulative public health costs. Heinrich's office cited these independent reviews as evidence that the permitting reform is necessary to meet climate goals.

The bill faces opposition from tribal and environmentalist groups who argue it fast-tracks fossil fuel production. Members of the YUCCA Alliance protested outside Heinrich's Albuquerque office last week. U.S. Rep. Melanie Stansbury, D-New Mexico, announced she does not support the bill as currently written. Critics argue that the new Democratic majorities in Congress should allow for a more comprehensive legislative effort in the next session.

Heinrich and his cosponsors intend to move the bill through both chambers of Congress before the next session begins in January. If Heinrich takes over as committee chair, he has said his priorities will include reducing energy costs for New Mexicans and protecting public lands. He stated he will negotiate in good faith to pass the legislation, whether he serves as chair or ranking member.