5 Midterm Races That Could Influence the AI Boom

A growing opposition to data centers is emerging locally, presenting a potential challenge to the booming artificial intelligence sector as the midterm elections approach. According to Morgan Stanley, there are five major races where candidates are suggesting new regulations and moratoriums on data centers.

The U.S. House of Representatives recently passed the Ratepayer Protection Act (RPA), a bill designed to protect communities from the rising costs of energy and infrastructure related to data center growth. The legislation garnered strong bipartisan backing, passing with a significant 417 to 3 vote. This may be one of the last significant legislative actions lawmakers take before the elections on November 3. The bill underscores the increasing scrutiny around data centers, which have become a focal point in discussions about affordability, energy consumption, and regulatory challenges.

This marks the first legislation related to data centers to be approved by the 119th Congress.

The bill does not aim to ban data centers or impose strict limits on their expansion. Instead, it modifies existing energy regulations under the Public Utility Regulatory Policies Act (PURPA), mandating that states adopt a federal standard requiring large data centers—those consuming 100 megawatts and more—to bear the full additional costs for necessary upgrades in generation, transmission, and distribution that are needed to support them.

Furthermore, companies must provide financial guarantees to offset costs in case a project is canceled or relocated, preventing local communities from shouldering the financial burden.

Rep. Gabe Evans, a Republican from Colorado and the bill’s sponsor, framed the legislation as crucial for ensuring that the financial impact of energy costs related to data centers does not fall on local taxpayers. He commented, “As America races to lead the world in AI, we must build the energy infrastructure needed to support this innovation and stay ahead of competitors like Communist China.” Evans emphasized that “Colorado families, farmers, and small businesses should not be forced to cover the costs” of this new energy demand.

Democratic co-sponsor Rep. Kathy Castor of Florida resonated with Evans’ concerns, addressing how local communities are grappling with escalating electricity bills. She stated, “Ratepayers should not have to subsidize wealthy corporations’ growing energy demands, especially from AI data centers.”

Recently, candidates from both political parties have carefully navigated the conversation surrounding data centers. Notably, Democrats have connected the issue to affordability, exemplified by former North Carolina Governor Roy Cooper, who is campaigning to replace retiring Sen. Thom Tillis. Initially supportive of data center growth as a source of jobs, he has since tempered his stance, asserting that local communities should have the ultimate authority over new projects and that data centers should bear the costs of their energy consumption.

His rival, Michael Whatley, a former chairman of the Republican National Committee, has echoed the sentiment of local decision-making regarding data centers. He stated, “Michael Whatley’s standard is simple: data centers pay their own way, families pay nothing, and communities decide.” Whatley’s campaign stressed that tech companies should finance their energy needs and any required infrastructure upgrades without transferring costs onto residential users.

Having received approval from the House, the data center bill now moves to the Senate, where its prospects remain unclear.