Washington lawmakers push to regulate data centers

OLYMPIA — Land of the french fries and all things potato, Quincy has become the home base for Washington’s data center boom. Home to 13 data centers, the industry has fueled economic growth while spurring significant environmental and energy concerns. Now, Washington lawmakers are confronting the state's high power demand in newly proposed companion bills. 

House Bill 2515 and Senate Bill 6171 would place new requirements on data centers, aiming to raise electricity rates for high usage while offsetting any rate increases that may be passed down to regular consumers. 

The house version was heard at a public hearing ahead of the House Environment and Energy Committee on Jan. 22, where primary sponsor Rep. Beth Doglio, D-Olympia, asserted that the legislation is necessary to keep data centers in line with the state’s clean energy goals. 

“These policies seek to protect ratepayers by ensuring new data centers are picking up the whole tab for new growth, to protect against stranded assets, ensure grid reliability,” Doglio said in opening remarks.

Doglio added that the bill includes a curtailment process, ensuring that during energy shortages, data centers are one of the first to go out. 

If passed, the legislation would require data centers to report on energy and water use and require both public and private utilities to propose a set of tariffs or contracts for higher electricity rates. It would also establish an 80% threshold of electricity from renewable resources by 2030 and 100% by 2045, keeping data centers in line with Washington’s Clean Energy Act. 

Additionally, the bill directs data centers to pay an annual fee of a half a penny every kilowatt of energy to the Department of Revenue. The funds would be deposited into a new account intended for low-income energy bill assistance, weatherization, and higher education purposes. 

Rep. Alex Ybarra, R-Quincy, member of the Environment and Energy Committee, expressed stern opposition. He claimed that the bill would cancel out the sales-and-use tax incentives that allow companies to purchase server equipment, power infrastructure, and labor services at a reduced rate.

“It will not do anything for meeting our carbon goals,” Ybarra said in an interview. "All it's going to do is knock the data centers out of the state of Washington.” 

Data centers have flocked to eastern rural towns such as Quincy because of its immediate access to cheap hydropower from the Columbia River. However, according to Ybarra, the hydropower from the dams is already dwindling. 

Chuck Allen, senior manager of external affairs at Grant County Public Utility District, said that the average generation they receive from the Wanapum and Priest Rapids dams is lessening, unable to match the pace of growing demands. 

Currently, data centers account for 45% of Grant PUD’s average annual load, requiring 800 megawatts per load to function.

Allen emphasized that while the average power load is exceeding their power generation, they are adjusting their rate strategy to ensure core customers, such as residents, agricultural, and small businesses, will receive preferential access to their lowest cost power generation. 

“To meet the needs of our growing customer base, Grant PUD is constructing new power-delivery infrastructure, including transmission lines, substations, and switchyards to serve our growing power load,” Allen said in an email. “We are entering into long-term power purchase agreements with power generators to supplement our current hydropower and wind resources.” 

Ybarra, however, explained that subjecting data centers to the new requirements amid limited clean energy supply and lack of transmission lines and other supporting infrastructure would push them to move elsewhere. 

Ybarra emphasized that data centers significantly increased Quincy’s assessed value to more than $6.1 billion as of 2025, paying 57% of its property tax base. He also mentioned that the town’s levy rate has gone down, with data centers paying $25 million out of $44 million for an ongoing school levy. 

“We got the high school, new City Hall, new EMS building,” he said. “New fire station, new library … our roads are all paved … Now, probably 90% of all the roads have sidewalks.” 

Ybarra went on, stating that the city is currently building a new swimming pool and two new indoor soccer fields. 

Much of the legislation came from the recommendations of Gov. Bob Ferguson’s workgroup that assessed data centers' impact on energy use, tax revenue and the surrounding environment. The workgroup’s findings were published in a preliminary report last month. 

According to the report, data centers are the largest source of expected load growth in the Pacific Northwest, with the Northwest Power and Conservation Council projecting that data centers and chip fabrication could add between 2,200 and 4,800 average megawatts of load by 2030.  

The report also found that although the tax incentives require data centers to meet certain green building standards, they are insufficient to ensure that they are achieving any specific level of energy efficiency or clean energy sourcing. 

Eight out of the nine workgroup recommendations are included in the current bill, except one that would require data centers to bring their own sources of clean energy as a part of the tax break. 

Zachariah Baker, regional and state policy director for the Northwest Energy Coalition, explained that the provision would require extending tax breaks statewide, which they ultimately decided against. 

“I very much supported the idea of having clean energy requirements as part of the tax incentives, but was concerned about the idea of expanding the tax incentives statewide without knowing whether there would be all these affordable environmental protections,” Baker said. 

Ferguson, in his 2026 supplemental budget, proposed rolling back the data center’s tax incentive for replacement server equipment by July of this year, aiming to save approximately $63 million by 2027. 

The bill is a part of a larger legislative push to regulate the data center industry and has yet to be scheduled for an executive session.