Powering the AI Buildout: Measuring Data Center Demand and Reforming Energy Policy
…Consumer-Regulated Electricity (CRE)—removes the forecasting problem rather than managing or allocating its cost. A “build-your-own-power” approach, CRE would permit a privately financed electric utility, physically islanded from the regulated grid, to serve new nonresidential load under voluntary contract without state economic regulation of its rates, while remaining fully subject to environmental, siting, and safety law. The American Legislative Exchange Council has adopted a model act on this design, a federal companion, the Decentralized Access to Technology Alternatives Act of 2026 (S. 3585), was introduced by Senator Tom Cotton in January 2026, and Louisiana has both considered enabling legislation and opened a commission docket on private-use networks.
Because CRE serves only new load, on an islanded system and at contract prices, a forecast that is incorrect in either direction would have zero impact on ratepayers. Several states have made significant strides in pursuing CRE, including New Hampshire, Utah, and Ohio. CRE eligibility has thus far been aimed mainly at new load; Utah’s law, for example, reaches new or added load of 100 megawatts or more but not a customer’s existing load. Although this restriction prevents users from leaving the grid and unloading fixed costs from existing assets onto ratepayers, such a blanket limit may be overly onerous. A better question is not whether a customer’s load is new, but rather whether its departure from the grid would impose meaningful costs on existing ratepayers. That concern is largely irrelevant for firms having long-abandoned grid connections, facilities whose customer-specific infrastructure has already been fully depreciated, or existing customers seeking to supply a substantial amount of new load in an alternative capacity. The restriction also shields incumbent utilities from competition for their existing large customers, weakening the pressure to keep large-load tariffs competitive.
…forecasts of data center electricity demand carry significant uncertainty and, as a result, price risk. CRE addresses that risk by creating islanded grids; large-load tariffs transfer this price risk through contracts. The ideas suggested in this section can give lawmakers, utilities, and grid operators a variety of options to manage these risks.
https://advancingamericanfreedom.com/memos/powering-the-ai-buildout
