A proposed Senate bill could generate $55 billion in transmission charges from data centers over 10 years if it becomes law. It would require large computing facilities to pay more for access to the electricity grid and the infrastructure needed to serve them.
For data center developers, the proposal could raise the cost of grid-connected projects, influence where new campuses are built and change the economics of behind-the-meter generation. It could also make firm transmission service more expensive relative to arrangements in which operators accept power curtailments during grid stress. Developers could face greater pressure to demonstrate load flexibility.
But shifting more costs to data centers addresses only part of the ratepayer problem. Utilities also need assurance that the large loads driving infrastructure investments will materialize, arrive on schedule and consume the electricity developers have promised.
The Bipartisan American Affordability and Jobs Act would require the Federal Energy Regulatory Commission (FERC) to revise its transmission-pricing policy. Under the proposal, utilities would charge data centers for both their share of existing transmission infrastructure and incremental costs associated with serving their loads.
Grid Strategies, a consulting firm that specializes in the power sector, estimated in a recently published white paper that the pricing changes would generate approximately $5.5 billion annually in transmission charges, compared with roughly $2 billion that data centers currently pay. The analysis projected a $35 billion increase over current arrangements across the decade.
The projected $55 billion includes $35 billion in embedded transmission costs and $20 billion in incremental costs. Both categories support the grid, but the additional revenue could enable transmission construction that otherwise might not happen, said Rob Gramlich, president of Grid Strategies.
PJM and MISO account for most projected charges
Grid Strategies estimated that data centers in PJM's and the Midcontinent Independent System Operator's (MISO's) regions would account for approximately 82% of the projected $5.53 billion in annual charges.
The analysis assigned about $2.31 billion in annual charges to PJM and $2.25 billion to MISO. It projects 13.4 gigawatts of new data center capacity in PJM and 16.7 GW in MISO. PJM's higher charges, despite its smaller projected pipeline, reflect the region's higher transmission rates, Gramlich said.
Grid Strategies based its incremental transmission cost estimates largely on MISO data. The analysis includes 163 approved transmission projects representing approximately $11.4 billion in investment to connect 43.5 GW of large loads. Researchers calculated an average incremental cost per megawatt and applied it across the regions they studied.
Grid Strategies estimated the projected revenue could support nearly 10,000 miles of new 765-kilovolt transmission lines over 10 years. That construction would depend on when and where data centers connect to the grid.
The analysis excluded Texas' ERCOT market, where FERC doesn't traditionally regulate transmission service.
Grid connections likely to remain attractive
Higher transmission charges could make locations with available electrical capacity and predictable power-delivery timelines more attractive. Developers could also turn to behind-the-meter generation to reduce their reliance on utility-supplied electricity.
Gramlich said he doesn't expect most data centers to abandon grid connections. Reliable power from an entirely off-grid system generally costs more and presents greater operational challenges, he said. He expects behind-the-meter generation to supplement utility service rather than replace it, potentially reducing the incremental transmission charges associated with a project.
The $55 billion estimate assumes new data centers take firm transmission service. Developers that operate entirely off grid wouldn't generate those charges. Gramlich said that scenario is unlikely because data centers still derive substantial value from grid connections.
Behind-the-meter generation also brings its own costs and dependencies, including fuel supplies, equipment, permitting and maintenance. Developers may reduce their transmission exposure while taking on other operational and financial risks, said Neil Osnato of Persistence Analytics Group.
Utilities need proof demand will materialize
Higher transmission charges won't prevent utilities from building infrastructure for data center projects that developers later delay, downsize or abandon.
Before committing billions of dollars, utilities should require binding capacity commitments, financial security tied to their actual exposure and contractual protections against early termination, Osnato said.
Developers should specify reserved megawatts, expected load ramps, enforceable milestones and consequences for delays or downsizing. Deposits and collateral should cover the costs a utility could fail to recover if a project falls through. Depending on the development, financial backing could include letters of credit, cash collateral or parent-company guarantees.
Minimum-billing commitments and early-termination provisions can also protect other customers when actual consumption falls below projections, or a developer abandons a project. Utilities should tie major spending decisions to verified milestones, including site control, permits, financing commitments and executed power arrangements.
A material change in a project's load forecast, commissioning schedule or financing should trigger a fresh review of the utility's exposure and remaining construction commitments.
Some existing utility tariffs and agreements already contain versions of these protections, Osnato said. But an interconnection agreement doesn't guarantee project completion, and a deposit might not cover the utility's full potential exposure.
“Congress can change who pays for the transmission line. It cannot legislate the data center's demand into existence,” Osnato said.
Regulators should also separate costs attributable to individual projects from investments that provide documented benefits to the broader grid, he said.
Bill also addresses generation costs
Section 2107(b) in the proposed Senate bill would establish a Ratepayer Protection Floor requiring states to address the costs large computing facilities impose on generation, storage, transmission and distribution infrastructure.
Grid Strategies estimated the provision could result in another $136 billion in incremental generation costs recovered from data centers over 10 years if states fully implement the policy. That figure reflects potential cost exposure under the researchers' assumptions, not a forecast of actual collections or a verified increase in total electricity-system costs.
The legislation also addresses financial assurances and continued liability for unrecovered costs when covered large loads exit early. The effectiveness of the protections would depend on implementation and enforcement.
Estimates depend on future development
Grid Strategies' $55 billion estimate assumed that 40.3 GW of new data center capacity outside Texas would be subject to the proposed policy. Researchers drew that projection from Enverus' third-quarter 2026 high-confidence data center project tracker.
Actual charges would depend on FERC's final rules, applicable tariffs, contractual arrangements and the infrastructure requirements of individual projects.
Congress must pass the legislation, and the president must sign it before FERC can implement the proposed changes. The Senate referred S. 5653 to the Energy and Natural Resources Committee after its introduction September 30.
The proposal could give utilities a new way to recover infrastructure costs from the large customers driving demand. Protecting ratepayers, however, will also require utilities to verify that projected loads justify their investments and that developers can cover the costs when projects fall short.
Shane Snider is a senior news writer at TechTarget, covering AI infrastructure, hyperscale data centers, cloud platforms, and the power and energy systems driving modern compute expansion. You can reach Shane at [email protected] or on LinkedIn.
