CHICAGO — Amid concerns about data centers’ impact on prices, electricity supplies and the environment, two Illinois lawmakers have introduced a bill to regulate new projects in Illinois.
The bill, called the POWER Act, establishes comprehensive environmental, water and energy regulations for “hyperscale” data centers. State Sen. Ram Villivalam is sponsoring the bill in the Senate, and state Rep. Robyn Gabel, D-Evanston, is the lead sponsor in the House.
“Now is the time for us to come together and take action to address challenges our communities are facing that are posed by data centers and instill common sense guardrails to minimize their impact on our neighbors,” Villivalam, a Democrat whose 8th District includes parts of Chicago and the northern suburbs, said Wednesday at a news conference.
Data centers enable vast amounts of storage and processing to meet the needs of web hosting, cloud storage and AI, or artificial intelligence.
Prices
To address concerns about prices, the bill would require new data centers to pay for their own energy costs, including infrastructure needed to generate that energy. It also requires energy to come from renewable sources and prohibits data centers from shifting costs to residents.
An analysis by the Union for Concerned Scientists, which supports the POWER Act, showed data centers could increase electricity system costs by $24 billion to $37 billion by 2050.
James Gignac, the Midwest policy director for the climate and energy program at the Union of Concerned Scientists, said the demand for power could lead to natural gas and coal-fired power plants staying online without renewable energy investments.
“Data center load growth would mean more air and climate pollution, which in turn will threaten our climate goals, our communities and our health,” he said at the news conference Wednesday.
A December report by three Illinois agencies concluded the state could face power shortages and price increases because of a combination of factors that include new data centers coming online.
Gov. JB Pritzker, who has long championed data centers coming to Illinois and signed a tax incentive proposal to lure them here early in his tenure, indicated he’d be open to further regulation.
“If they do threaten to raise rates, we’ve got to slow them down and make sure they understand what their responsibilities are. We’re going to be looking at it in the legislature in the spring,” he said at a Monday event in Granite City.
Illinois has provided tax incentives for data centers since Pritzker signed bipartisan legislation in 2019. According to the state’s 2024 report, at least 27 data centers had received incentives totaling $983 million in estimated lifetime tax breaks and benefits.
Groups like the Illinois Manufacturers’ Association said the proposal would “hamper development” of data centers and Illinois should “focus on an all-of-the-above energy approach.”
Water
The bill requires data centers to report their water usage, including how much they take in and discharge. Large centers can consume millions of gallons of water a day to cool computer servers and prevent overheating.
“Currently, data centers are not required to disclose, track or report water use,” said Andrea Densham, senior policy adviser for Alliance for the Great Lakes. “Without this information, communities cannot accurately plan for or anticipate demand or make informed siting decisions.”
The POWER Act would also require data centers to obtain water permits from the Illinois Environmental Protection Agency, which would regulate how the centers handle wastewater, and meet water efficiency standards
“Without proper planning, management and monitoring tools, water shortages, groundwater conflicts and increased prices, pollution and contaminated aquifers are all a real risk,” Densham said.
Pollution
To protect the environment and the people who live near data centers from pollution, the bill requires full environmental assessments for how the data center would impact the community. It also requires new data centers to establish community benefits agreements where they’re developed.
“Data centers must pay their fair share and contribute to solutions, not just bring more problems for our communities to bear,” said Lucy Contreras, Illinois state program director for GreenLatinos, a national nonprofit that organizes around environmental issues in the Latino community.
The bill also creates the Public Benefits and Affordability Fund, paid for by data centers through annual fees based on peak demand, to support the local community with energy bill assistance, air quality monitoring and water infrastructure.
“That is really where communities will have a say,” Contreras said.
Feasibility
Democratic and Republican figures in states across the country also are considering new data center regulations.
When asked about whether the POWER Act would discourage development in Illinois, Villivalam said the state isn’t saying “no” to data centers.
“We’re saying, ‘Here are our closely held, staunch principles on how we can get there,’” he said.
He acknowledged there would need to be conversations with labor and industry, but Illinoisans are demanding the state to do something about electricity bills.
“We are seeing data centers build here and in different regulatory environments,” said Jennifer Walling, the executive director of the Illinois Environmental Council. “They are looking here and they’ll continue to look here, even if we have regulations in place.”
Capitol News Illinois is a nonprofit, nonpartisan news service that distributes state government coverage to hundreds of news outlets statewide. It is funded primarily by the Illinois Press Foundation and the Robert R. McCormick Foundation.