Illinois Lawmakers Debate Data Center Regulations as Energy and Water Concerns Mount

Illinois Lawmakers Debate Data Center Regulations as Energy and Water Concerns Mount

Illinois legislators are considering multiple proposals to regulate the state's rapidly expanding data center industry as concerns grow over its impact on the electrical grid, utility costs and water reservoirs.

State Rep. Carol Ammons, D-Urbana, warned utility companies Commonwealth Edison and Ameren have received proposals for new data centers requiring a combined 44 gigawatts of electricity. That amount exceeds the power consumption of 44 Orlandos.

"The people of Illinois cannot afford to continue to bear the cost of this innovation," Ammons said.

Ammons introduced the POWER Act, legislation that would require developers to pay for their own renewable energy generation and grid upgrades. The bill would also force data centers to make their water usage public and mandate permits that require certain water-efficiency standards.

Illinois has the fourth-highest number of data centers in the U.S. Demand for the centers is only growing as companies seek out large facilities nationwide to store servers and keep them cool.

State leaders once promoted the industry as a means of economic growth. Officials now express concerns that new data centers could drive up utility costs and threaten the state's natural resources.

Bipartisan Interest in Protections

Republican State Sen. Chapin Rose, R-Mahomet, has introduced a separate package of bills focused on energy costs and water protections, particularly for the Mahomet Aquifer.

"These data centers need to come with their own power," Rose said. "If they're going to hook into the Clinton nuclear power plant... it's just going to raise everybody else's bills."

He also called for a permanent moratorium on data centers using water from the Mahomet Aquifer, which supplies drinking water to nearly 1 million people in central Illinois.

"It is our sole source aquifer, meaning there is no other place to go for a million Illinoisans," Rose added.

Industry Arguments

Advocates for the data center industry say the facilities already account for their impact on the energy grid and that they can help improve infrastructure and lower costs for other customers if managed correctly.

Brad Tietz, director of state policy at the Data Center Coalition, said the industry is "100% committed to ensuring its full cost of service." He added that projects help absorb infrastructure costs that would otherwise fall on residents.

"In most states that are seeing increased large load or data center development, they're actually seeing a freeze or a reduction, adjusted for inflation, for other ratepayers," Tietz said.

Utility Concerns

Sarah Moskowitz, executive director of Citizens Utility Board, said the POWER Act's requirement that data centers be put in their own rate class is another important cost-control measure.

"If the growth continues, we're seeing estimates that in the next 24 years, the costs of serving these facilities could reach between $24 and $37 billion here in the state of Illinois for up to $70 a month in a typical bill," Moskowitz said.

Brian Granahan, director of the Illinois Power Agency, told the House Executive Committee there is more demand pending in the customer connection queue than traditionally seen on the system.

"If all the projects in our pipeline come to be and they all reach their maximum, requested demand will more than double our system peak it took us 120 years to achieve, roughly by 2040," Leichtman said.

Governor's Response

Gov. JB Pritzker has indicated an openness to shift course on incentives for data centers to address utility costs. The governor signed a law in 2019 offering tax breaks to data center operators. In his 2026 budget address, however, Pritzker suggested the state should pause those incentives.

"We need to think critically about our future energy usage with the needs of Illinois households at the forefront," Pritzker said in a statement. "In the face of rising demand and surging prices, I'm proposing a two-year pause on authorization of new data center tax credits."

Water Use Transparency

Lawmakers are also pushing for more transparency regarding the amount of water used by data centers for cooling. The proposed POWER Act would require data centers to report water usage and create sustainability plans.

Helena Volzer, senior source water policy manager for the Alliance for the Great Lakes, said one of the major benefits of the POWER Act is that it begins to address what she described as haphazard water management planning in Illinois.

"The connection between groundwater and surface water means that surface water resources can become stressed if groundwater becomes depleted," Volzer said. "With simultaneously competing demand for water from agriculture, industry, data centers and residential use, communities in Illinois are facing complex tradeoffs in managing primary water supplies."

The POWER Act requires data centers to produce plans for water use, scarcity and sustainability. It also requires data centers to use the most water efficient cooling method using closed loop cooling as a baseline for efficiency and to report that usage four times a year to the Illinois Power Agency and to a publicly accessible website.

Industry Pushback

Brad Tietz pushed back on the planning requirements, arguing that data center developers already work closely with utilities and municipalities to make plans and ensure the facilities will have the cooling resources they need.

Compared to agriculture, some manufacturing and golf courses, Tietz said data centers are much more water efficient.

"Cooling data centers involves inherent tradeoffs," Tietz said. "Air cooling tends towards higher energy use, while liquid and evaporative methods typically require more water. Selecting a cooling technology therefore becomes a matter of balancing energy consumption and water usage."

Lawmakers said those developments do not change the need for transparency about how data centers operate in communities.

Rep. Theresa Mah, D-Chicago, said she did not understand why the industry objected to making project plans public.

"I live in a community where there's a data center nearby and it's been important for my constituents and myself to know what's happening there and to have that transparency," Mah said.

Rep. Ann Williams, D-Chicago, said managing water needs in Illinois requires information about large water users to be available for everyone and data centers are a good place to start.

"I know every data center company is different, but what's the objection to providing that upfront transparency?" Williams asked.

Next Steps

Lawmakers are expected to continue debating the proposals before the spring legislative session concludes at the end of May.