Bwick News Column from Public Policy Center loves "indispensable" data centers, insists GA Power customers eat their cost
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The next chapter of data center policy in Georgia
- By J. THOMAS PERDUE Syndicated columnist
Data centers have been an integral part of energy infrastructure for much longer than they’ve been a ubiquitous topic in public policy conversations. But the rapid advance of artificial intelligence over the last few years has meant increased demand for more data centers. The pace and scale of the industry’s growth have caused some Georgia policymakers to question how we treat it.
conversation about data centers’ associated tradeoffs now feels much more urgent. Politicians across the political spectrum and at all levels of government have taken notice and are taking action to set the most sustainable path for how Georgia handles its archipelago of data centers, particularly in terms of tax incentives, resource consumption and who pays for the energy they require.
Georgia’s posture toward data centers over most of the past decade has been largely focused on recruitment and building. The state’s flagship tool was a sales-tax exemption enacted in 2018, designed to lure large facilities with major capital investment and a minimum jobs requirement.
This approach made sense at the time. Data centers bring with them high construction spending and a number of positive implications like meeting surging demand for data and updating digital infrastructure. However, now that growth is no longer hypothetical, lawmakers are grappling with the scale of data centers, which is unique from most industrial projects. Their demand for electricity can be huge, and ancillary costs including short-term strain on electrical grids, water usage and higher electric bills have been noted as well.
This legislative session has seen several new proposals aimed at the industry, including bills that would shorten or end the tax break, and even proposals to temporarily restrict new construction. As of this writing, none of these proposals have been passed out of their respective chambers, however the volume of legislation, as well as the bipartisan nature of this political direction, is notable.
Another side of the data center policy debate has played out in both the legislature and the Georgia Public Service Commission, which regulates statewide utility costs. They have both asked a question of fairness: When large-load customers like data centers drive up electrical costs, who should be on the hook for the bill?
Advocates will note that the higher costs associated with data centers typically include some broad return, be it expanding the local tax base, spurring ancillary development or justifying overdue grid investments that improve service for surrounding customers.
In late 2025, the PSC approved a stipulated agreement to allow for new energy production from Georgia Power, explicitly framing it as protection for existing ratepayers and emphasizing that data centers would bear the infrastructural costs. The PSC has also detailed oversight changes including requirements for quarterly reporting, cost-allocation studies and rule changes like minimum billing and longer contract terms so that new large-load customers keep paying for infrastructure even if they exit the state.
Another push from the legislature could collide with the PSC’s adjustments. Senate Bill 34, introduced last year, has garnered attention from the public and the PSC. It would prohibit an electric utility from rolling “certain costs” of serving commercial data centers into general rates unless those costs are recovered solely (or at least “substantially”) from the data centers themselves.
While SB 34 has yet to pass out of the Senate, a House companion bill introduced this year cleared its chamber on Tuesday. House Bill 1063 seeks to address the same issue, but it takes a different approach than SB 34. Rather than writing cost-allocation into statute, HB 1063 focuses on the contract between a utility and a large-load customer. It defines a data center by its size and requires any new contract for service to include terms meant to prevent other customers from absorbing the incremental costs of building to serve that load.
A spokesperson for the PSC said that the Commission agrees “philosophically” with SB 34 because it mirrors the rule it already put in place. However, the PSC has also signaled that it is wary of the General Assembly implementing a single customer class into the rate code. In a hearing on SB 34 in the Senate Regulated Industries and Utilities Committee, PSC Director of Utilities Tom Bond urged lawmakers to proceed cautiously because limiting future commission flexibility is “risky” and can create unintended consequences.
Georgia Power has echoed the same critique, arguing that additional statutory mandates would be duplicative and could constrain how the commission balances affordability, reliability and growth.
While HB 1063 could be considered complementary to the PSC’s posture, the difference between a solution by statute and future recalibrations by the Commission could still be a subject of disagreement. Passing a law creates a durable, enforceable guardrail against cost-shifting that can’t be softened by future Commissions, whereas ratemaking grants flexibility as local forecasts and conditions change.
The implications of policy decisions like how to manage tax incentives and cost allocation impact what kind of growth model Georgia will have in the AI era. Despite the fact that several Republicans and Democrats have agreed generally on a more cautious approach moving forward, data center policy still attracts a varied and often irreconcilable set of philosophies on their construction.
Beyond that, demand for data center services is not going anywhere. They are indispensable pieces of digital infrastructure, and Georgia must work to solve the practical challenges associated with them without resorting to reactionary and self-destructive policies.
J.Thomas Perdue is a Policy Analyst at the Georgia Public Policy Foundation.