Sanders and Ocasio-Cortez Propose Moratorium on Data Centers Amid Controversy

Senator Bernie Sanders (I-Vt.) and Representative Alexandria Ocasio-Cortez (D-N.Y.) have introduced a bill proposing a moratorium on the development of data centers. The lawmakers argue that these facilities pose an "existential harm" to society, particularly in relation to artificial intelligence (AI) and its implications for health and safety. They assert that the interests of "billionaire Big Tech oligarchs" should not come at the expense of workers and that the expansion of data centers should not lead to increased electricity costs. This initiative echoes their previous efforts with the Green New Deal, which aimed to address climate change through progressive measures.

Sanders and AOC have data centers in crosshairs, but research raises doubts about their criticisms

The concern regarding electricity rates is not limited to Sanders and Ocasio-Cortez; it resonates across the political spectrum. Several states, including Georgia and Florida, are contemplating legislation to curb the growth of data centers due to fears of rising electricity costs. However, a recent study by the Institute for Energy Research (IER) challenges the narrative that data centers significantly contribute to higher electricity rates. The study found no statistically significant correlation between the number of data centers in a state and electricity costs.

Sanders and AOC have data centers in crosshairs, but research raises doubts about their criticisms

Daniel Simmons, an IER fellow and former assistant secretary for the Department of Energy, highlighted key findings from the study. It examined three questions regarding data centers and electricity rates. The first two questions revealed no significant correlation between data centers and electricity rate increases over time. Interestingly, the study indicated that states experiencing high growth in electricity demand saw an average increase of 20% in electricity rates from 2015 to 2025, while states with low growth averaged nearly 40% increases.

Sanders and AOC have data centers in crosshairs, but research raises doubts about their criticisms

Simmons explained that the primary costs associated with electricity are related to financing, building, and maintaining power plants and transmission lines, rather than the production of electricity itself. When electricity sales grow, fixed costs are distributed across more kilowatt-hours, keeping per-unit rates lower. Conversely, stagnating sales lead to higher rates for consumers, as fixed costs are spread over a shrinking base of ratepayers.

Sanders and AOC have data centers in crosshairs, but research raises doubts about their criticisms

Critics of the proposed moratorium argue that it overlooks the broader utility of data centers beyond AI. Simmons emphasized that data centers support various online activities, including communications and e-commerce, and that opposing their growth based solely on concerns about AI could hinder these essential services. He cautioned against a blanket rejection of data centers, stating, "Let's not throw the baby out with the bath water."

Sanders and AOC have data centers in crosshairs, but research raises doubts about their criticisms

While Sanders and Ocasio-Cortez focus on the potential dangers posed by data centers, the IER study suggests that attributing rising electricity rates to these facilities is misguided. Simmons noted that the current data does not support claims that data centers are responsible for high electricity costs, indicating a need for a more nuanced understanding of the issue.

Sanders and AOC have data centers in crosshairs, but research raises doubts about their criticisms

• “For people now to point to data centers and say that they are the cause of high electricity rates, that is just completely and utterly wrong,” Simmons said.” — Daniel Simmons, IER Fellow

Sanders and AOC have data centers in crosshairs, but research raises doubts about their criticisms

• “Let's not throw the baby out with the bath water, in terms of AI or other types of data centers, because they help us with a whole lot of stuff that we really like,” — Daniel Simmons, IER Fellow

Sanders and AOC have data centers in crosshairs, but research raises doubts about their criticisms