Ask ChatGPT if data centers are good for a community, and you’ll get an answer something like this, “Yes — a new data center can be good for a community, especially economically and infrastructure-wise — but it’s not an automatic win.”
Virginia’s General Assembly would be wise to heed the warning inherent in those italicized qualifiers “can” and “but.” After all, they come directly from the artificial intelligence responsible for much of the ongoing boom in data centers.
This year’s legislative session includes more than two dozen bills addressing the effects of data centers on energy costs, water consumption, noise pollution, air quality and tax revenue. Some of the proposals are holdovers from 2025, including measures vetoed by former Gov. Glenn Youngkin.
Unlike Youngkin, who contended data centers are largely a local, not a state, issue, Gov. Abigail Spanberger has indicated she supports the commonwealth providing a framework to provide communities enough information to make informed decisions about data center growth.
Virginians agree, it appears. A recent Christopher Newport University poll shows a majority of residents favor bills establishing more oversight of data center growth and greater transparency from developers about what their projects will mean to communities. Eighty-six percent want a law requiring a site assessment regarding impacts on electric rates and capacity, water usage, noise and more.
Virginia is the world leader in data centers, with more than 660 operational and almost 600 more under construction or planned, according to a recent study. Northern Virginia, home to 35% of all data centers, is the titan of the industry, but proposals for centers are popping up statewide, including Hampton Roads.
Not all of the measures under consideration in Richmond will be — or should be — passed, but two bills sponsored by Del. Shelly Simonds, D-Newport News, have merit.
House Bill 591 would require the state to promote coordination between data center developers, state agencies and regional electric grid operators to minimize the potential negative impacts on communities. The measure would provide a more comprehensive approach to planning for data centers rather than letting state policy take shape in a piecemeal fashion, locality by locality.
A separate bill from Simonds, House Bill 589, would require the State Water Control Board to establish resource plans for major river basins and give the agency the power to obtain usage data from developers. While much of the public’s attention has focused on the electrical use by data centers, their draw on water supplies is also significant. A large data center can use up to 5 million gallons of water a day, the equivalent of a town of 10,000 to 50,000 people.
Another bill of note is from Sen. Louise Lucas, D-Portsmouth, whose revised Senate Bill 253 would give the State Corporation Commission the authority to require data centers to pay for capacity costs, the fee paid by utilities to wholesale electric markets to reserve enough power to meet peak demands.
If the bill passes and the SCC imposes the charge, high-use customers such as data centers would pay 16% more for a typical bill, while the average bill for residential customers and others would drop 3% to 3.5%. The measure, which has Dominion Power’s support, would apply to a new rate class encompassing data centers.
Other bills address the sales and use tax exemption granted to data centers for equipment and software, with some legislators seeking to attach conditions requiring the centers to use renewable energy. Sen. Danica Roem, D-Prince William County, would eliminate the exemption and restore close to $2 billion each fiscal year to state coffers — an idea that warrants discussion given the immense wealth of Google, Amazon and other data center builders.
Data centers can indeed be a boon to the commonwealth and localities, generating property tax revenue and short-term construction jobs. But, in this and future sessions, lawmakers need to shield Virginians from bearing greater costs in higher electrical bills, potential water shortages, noise and other detrimental effects.
