Why Should Delaware Care?
Delaware could become home to five new data centers that would bring a combined energy demand that nearly equals what the entire state uses today. New legislation in the Delaware statehouse aims to prevent the costs of a demand spike from being passed onto other energy consumers, though critics say they may also scare off the growing industry.
A bill that would require data centers companies to pay more for their electricity will likely come up for a vote in the full Delaware House of Representatives after it moved out of committee on Wednesday.
Sponsored by Rep. Frank Burns (D-Pike Creek), House Bill 233 comes in response to fears that a surge of energy-hungry data center projects could strain the power grid and raise residents’ bills.
The same day that the House Natural Resources and Energy Committee released Burns’ bill, the Senate’s energy committee debated another bill that would require data centers to obtain new permissions from electricity regulators — called certificates to operate.
The two bills follow a stalled attempt by New Castle County to regulate the burgeoning data center industry, which has grown rapidly in recent years as investors chase the expected riches of artificial intelligence.
Both bills also attempt to make data centers bear the cost of high energy demands, rather than residents.
If current development proposals move forward, Delaware could be home to five new data centers in the coming years that have a combined energy demand that could double the state’s entire electricity usage.
Critics fear that scenario would lead to increased energy bills across the state — both because of a limited supply of electrons, and because of the costs of the infrastructure needed to serve the demand.
“Gone are the days of the single project that could be expected to only impact a small discrete area,” State Sen. Stephanie Hansen (D-Middletown) said during the Wednesday hearing of the Senate Environment, Energy and Transportation Committee.
Hansen is the sponsor of the Senate Bill 205, which would require big commercial energy consumers to obtain certificates to operate from state regulators. The certificates could include mandates that the companies pay for grid modernization or commit to providing additional energy generation.
Hansen said she does not yet have enough votes from the energy committee for the bill to be released to the full Senate.
In response, critics of the bills — including some lawmakers, business lobbyists and union representatives — have expressed fears that the legislation could prevent the growing data center industry from even coming to the state.
“We’re putting up another sign that says Delaware is not open for business. And when we continue to do this, then we hurt everybody,” Rep. Jeff Hilovsky (R-Long Neck/Oak Orchard) said about the House bill.
Bills face criticism
During Wednesday’s hearing, Senate Bill 205 received more criticism than positive feedback from committee members.
Senate Minority Whip Brian Pettyjohn (R-Georgetown) said he does not think the bill would prevent rising energy costs, since Delaware is part of the PJM grid and is impacted by a regional rise in energy demand.
He also said the bill could cause data center companies to instead invest in neighboring states with fewer regulations.
State Sen. Eric Buckson (R – Dover South) agreed, and asserted that multi-billion dollar companies will not want to invest in a state with rules that he believes could shut down data center project entirely.
“In my opinion, this becomes a de facto moratorium,” Buckson said.
Hansen said her bill is not meant to prevent data centers from coming to the state. Her bill does not appear to give the Public Service Commission the power to reject data center projects entirely, unless the companies do not follow the conditions laid out in the certificate.
Speaking in support of her bill on Wednesday was Delaware Municipal Electric Corporation President Kimberly Schlichting, who serves more than a half dozen cities and towns in Delaware, and representatives from the Delaware chapter of the Sierra Club. They said the legislation would provide protections against energy price increases for residents.
But representatives from local unions spoke against the bill, saying it would prevent new construction jobs from coming to the state.
During its committee hearing, House Bill 233 received similar criticism but bill sponsor Burns argued that Delaware has other incentives for data center companies, such as low taxes and access to a major transmission line.
At one point during the House committee, the question arose about whether Delmarva Power could simply prevent energy-hungry projects from connecting to the grid if they raised consumers’ electric bills. Rep. Rich Collins (R-Millsboro) said he would turn to an AI chatbot — powered by a data center — for the answer.
When he began to read its response to the committee, Rep. Krista Griffith (D-Fairfax) interrupted with a point of order. She stated that she is not comfortable with him using AI to answer the question when there were experts in the room.
Lisa Oberdorf with Delmarva Power then addressed the questions, stating the company does have an obligation to serve any users that want to connect to the grid.
Her answer contradicted the AI chatbot’s response.
