CT lawmakers grill data centers over electricity and water concerns
The nation's largest data center industry group told a state AI panel that Connecticut is not a "destination market yet" but "that can always change.”
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Despite growing fears about data centers, Connecticut is not a major focus for development, the nation’s largest industry group told a state artificial intelligence panel on Monday.
Still, lawmakers peppered the Data Center Coalition with questions about the massive computer warehouses.
DEBATE OVER DATA CENTERS
Republicans and Democrats agree on very little these days, but both sides are rallying around one politically popular issue – slowing down the rapid growth of data centers.
The sprawling facilities power everything from Amazon purchases to streaming shows on Netflix and autonomous vehicles. They also train new AI models critical to national security and health care.
“Monitoring a patient for signs of them getting sicker,” said Dr. Allen Hsiao with Yale New Haven Health. “At three in the morning, the doctors and nurses may not be at the bedside or at the monitor looking at every vital sign.”
But critics are raising alarms about how much water and electricity data centers use. In northern Virginia, home to the world’s largest cluster of data centers, electric demand is projected to jump 152% by 2040, according to a National Conference of State Legislatures analysis.
“Because of the sheer number of data centers, they’ve run out of power,” said state Sen. Norm Needleman (D-Essex), co-chair of the General Assembly’s Energy and Technology Committee. “And running out of power has caused enormous headaches.”
CT NOT A “DESTINATION MARKET YET”
That’s a particular concern in Connecticut, which has some of the nation’s most expensive electricity. But Dan Diorio with the Data Center Coalition, which represents Google, Amazon Web Services, Meta and other tech giants, told the panel that the state is not a focus for developers – for now.
“I can’t say with any certainty right now that Connecticut is a destination market yet for data centers,” Diorio said. “However, that can always change.”
Diorio said developers primarily look for sites with access to high-speed data lines, as well as cheap land and electricity.
“If they can build them, you know, for 10 or 12 cents a kilowatt hour down in the south versus in New England where it’s 24, 25 cents or 23 cents, they’re going to build them where it’s cheaper,” Needleman said.
DATA CENTER BENEFITS
Diorio argued that data centers bring thousands of construction jobs and millions of dollars in property taxes – without requiring new roads and schools, since most centers only employ a few dozen people.
He said developers are willing to pay higher electric rates and contribute to grid upgrades. But he pushed back against requiring centers to supply their own power, arguing that it could hobble smaller developers.
“It should be an option to bring our own energy, but it shouldn’t be the only option,” he told the group. “I want to reiterate that data centers are fully committed to paying our full cost of service for electricity. We depend on utilities, regulators, grid operators to help us do that.”
The NCSL analysis found that most data centers use about the same amount of water as a large office building or a golf course. Less clear is the impact they have on electric rates.
“Are data centers paying for necessary upgrades? Are they raising the cost for everyone? How can that be addressed?” NCSL policy associate Nicholas Miller said. “There are still a lot of unanswered questions.”
SHOULD CT PRESS PAUSE?
New York Gov. Kathy Hochul just paused new data centers for a year, but Connecticut leaders warned against an all-out ban.
“I understand why New York state had their one-year moratorium on building data centers,” said Gwen Cheni, director of the CT Innovations Venture AI Fund. “But now, I don’t think they recognize that the hesitation to build in New York will last more than a year.”
Ryan Fazio, the Republican candidate for governor, recently pledged to end a state tax rebate for data center developers. The bipartisan law passed in 2021 – at Gov. Ned Lamont’s urging – in hopes of making Connecticut a player in the tech industry. More than a dozen other states looking at repealing tax breaks too.
“We’re calling to end this special tax benefit for data centers to put guardrails on the industry and to require that they bring their own power,” Fazio said.
So far, only one company has taken advantage of the subsidy, Cigna Health in Windsor. Lamont argued that Cigna’s $386 million investment is paying off.
“If Ryan wants to raise taxes on Cigna, I don’t,” the governor said.
Caught in the middle are state lawmakers, who are trying to find a middle ground.
“This conversation for me is about trying to figure out where that balance is,” said state Rep. Roland Lemar (D-New Haven).
