3.10.24 Legislature seeks data center study Concerns raised over delays

Legislature seeks data center study; Concerns raised over delays
March 10, 2024 2:30 pm • Last Updated: March 10, 2024 6:34 pm
By Erica E. Phillips, The Connecticut Mirror
Connecticut leaders are weighing the stress that massive data
centers could place on the region’s power grid against the economic
opportunities they offer, as rapid advancements in technology
accelerate demand for data processing capacity.
A proposal to study how large-scale data centers might affect the
reliability of the state’s electric grid is drawing opposition from
those who say it would delay critical development.
The General Assembly’s Energy and Technology Committee heard
public testimony Thursday on the proposal. The legislation would
require the Public Utilities Regulatory Authority to conduct the
evaluation with the Department of Energy and Environmental
Protection, the Office of Consumer Counsel and ISO-New England,
the nonprofit corporation that manages the region’s power grid. It
calls for the effort to be completed by July 1 of this year.
Leaders with DEEP and the state’s Department of Economic and
Community Development took opposing stances on the measure.
“The demand and need for data centers is expanding significantly to
keep pace with the needs of AI expansion and may constitute
approximately 8% of U.S. energy consumption by 2030,” DEEP
Commissioner Katie Dykes told the committee, expressing her
agency’s support for the bill, S.B. 299.
“It’s really important to have the right framework to ensure that
there’s equitable deployment of this kind of demand that doesn’t
shift any costs — or increase costs — to other ratepayers and is
harmonized with the need to maintain reliability of the grid,” Dykes
said.
In written testimony, DECD Commissioner Dan O’Keefe urged the
committee to shift the focus of the study.

“Instead of studying the impact of data centers on the grid, the state
[should] instead study ways to support data centers on our grid to
leverage the greatest economic benefit they enable,” he wrote.
Fostering more data center development is critical, O’Keefe argued.
“We cannot afford to have them built first elsewhere, as these new
computing technologies are important for our economic future,” he
wrote. “It is in the states and communities where these data centers
are ultimately built that the greatest economic benefits will accrue.
We need that to happen here, in CT, and there is a limited window
of opportunity in which to act.”
Three years ago, the legislature moved with urgency to pass a bill
creating tax incentives to encourage data center development in the
state. The program waives sales and property taxes for 20 years on
data centers that invest at least $200 million in the state — or just
$50 million if the facility is located within a state-designated
enterprise zone. The tax exemptions may be extended up to 30
years with a larger investment.
Since the incentive was signed, a small number of developers have
taken initial steps to begin data center construction in a few
Connecticut towns. One major project — a hyperscale, 300-
megawatt development on the site of the Millstone nuclear power
station in Waterford — is closest to breaking ground. The developer
behind that project, NE Edge, signed what’s known as a “host fee
agreement” with the town last March, promising to pay a fee of
$231 million over 30 years in lieu of property taxes, as provided for
in the 2021 legislation.
The project consists of two 2-story data center facilities capable of
processing the massive amounts of data required by AI and other
advanced technologies. NE Edge would purchase power directly
from Dominion Energy in a “behind-the-meter” agreement that
would significantly reduce energy costs for the data centers.
NE Edge founder Thomas Quinn said if the legislature calls for a
study now, it could significantly delay the project and lead to
Connecticut potentially losing out to other states that are racing to
build hyperscale data centers. (Quinn was closely involved in

proposing and advocating for the 2021 legislation.)
“The market is ready for an AI boost, and we want to get this done
while we’re still in the game,” Quinn said.
Quinn testified on S.B. 299 before the Energy and Technology
Committee late Thursday, describing a wide range of economic
benefits the Millstone project
would generate and urging lawmakers not to approve the study. He
noted that he’d discussed with DECD the potential for the data
centers to provide services to the state at a discounted rate.
“This just slows us down for absolutely no reason,” Quinn told the
committee.
S.B. 299 also drew opposition from the Connecticut State Building
Trades Council, which has signed a project labor agreement with
NE Edge for the construction of the data centers, according to
written testimony.
Advocates from the Sierra Club, the Connecticut League of
Conservation Voters and Save the Sound offered testimony in favor
of the proposed study.
Lori Brown, executive director of CT League of Conservation Voters,
encouraged the committee to expand the study’s scope.
“Data centers are one of the most energy-intensive building types,
consuming 10 to 50 times the energy per floor space of typical
commercial buildings,” Brown said. “We’re asking that the
environmental and climate impacts be part of any study that you do
to assess the impacts of data centers on the regional electric grid.”
Sen. Norm Needleman, D-Essex, who co-chairs the committee, said
the legislation was specifically drawn up with the NE Edge project
in mind. He said he was concerned with one technical aspect of the
development: that the data center, powered directly by Millstone,
would at times draw on the regional grid as its backup power
source.
“My concern is not with having a data center,” Needleman said,

reminding those at the hearing that he’d shepherded the 2021
legislation through the legislature. “It’s with having a very
significant sized data center behind the meter at a nuclear power
plant — backed up by the grid — and what the potential impact is.”
He said later: “I just want to make sure, as chair of the Energy
Committee, that we don’t screw up the grid.”
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