A bipartisan Senate permitting bill whose text was posted on 30 September 2026 would require data centers of 20 megawatts or more to pay the full extra cost of the grid built to serve them. Section 2107 of the Bipartisan American Affordability and Jobs Act of 2026, “Ratepayer Protection”, says that no portion of that incremental cost may be recovered in the rates of any other customer.
The bill is sponsored by Senators Shelley Moore Capito and Mike Lee, the Republican chairs of the Environment and Public Works and the Energy and Natural Resources committees, and Sheldon Whitehouse and Martin Heinrich, the Democratic ranking members. On CNN on 7 October Heinrich said: “we mandate that [data centers] have to pay for both the electricity and for any grid upgrades.”
The section has two parts. The first tells the Federal Energy Regulatory Commission to revise its 1994 transmission pricing policy statement within 270 days of enactment, so that public utilities and transmitting utilities charge customers seeking transmission service for “computational load owners and computational load operators” both “the embedded cost and the incremental cost of transmission service”.
Incremental costs paid that way must be credited to the utility’s annual transmission revenue requirement “to prevent double recovery from other customers”, the text says. Sites that elect non-firm transmission service are to get a lower cost of service. A proposed rule is due within 270 days of the revised policy statement and a final rule within one year after that.
The second part adds a new section 228 to the Federal Power Act, titled “Ratepayer protection for data center and high-density computing load”. It covers load from data centers or high-density computing facilities that “equals or exceeds 20 megawatts”, at full buildout for sites built in phases, and it names artificial intelligence training or inference, cloud computing and cryptocurrency mining among the uses.
Section 2107 of the Bipartisan American Affordability and Jobs Act of 2026, as posted on 30 September 2026: what the new Federal Power Act section 228 would require of data-center loads of 20 megawatts or more. The rules apply to loads that interconnect on or after enactment.
Business Pill · COST ALLOCATION
A one-minute explainer of grid cost allocation: deciding who pays for the old grid and who pays for what is new. It teaches the general idea with a made-up example; Section 2107’s actual rules are described in the text above.
The key insight: As we read it, Section 2107 turns a fairness pledge into billing rules: the data center pays the extra cost of the grid built for it, keeps paying if it leaves early, and secures the money before construction starts. It applies only to loads that connect after enactment.
The Ratepayer Protection Floor
The new section defines incremental cost as the cost that would be avoided had a specific covered load not been served, including generation or storage, transmission and distribution. It then sets four rules.
No portion of that incremental cost may be allocated to, or recovered in the rates of, any customer other than the covered load. Recovery “shall continue” even if the data center ends its contract or stops buying power before the cost has been recovered. And before a utility builds or upgrades a facility needed to serve a covered load, it must require the load to provide “financial assurances or contributions sufficient to cover the cost of the facility or upgrade”.
The fourth rule permits a surplus: a state or the Commission may recover more than incremental cost from covered loads and credit the excess to other customers as a rebate or a rate reduction.
What States Could Do
The text says a state may set rates for covered loads above both the embedded average cost and the incremental cost, and credit the excess to other retail customers. It may also use an open season or competitive solicitation to award service to the data centers whose bids return “the greatest benefit to other ratepayers on a present value basis”, regardless of who applied first.
A state may also make service conditional on the data center procuring or building new generation sufficient to serve its demand, or on its taking a transmission service that limits how much or when it can draw power. Under a subsection titled “Protection of American Industry”, a state may treat covered loads as a separate class with terms “less favorable than” those for other large industrial, manufacturing or commercial loads.
Who Said What
Heinrich’s fact sheet says the bill “forces data centers pay their fair share by requiring data centers to pay for all of their associated transmission costs, rather than relying on a voluntary structure”. In the introduction release Whitehouse said the bill would “make data centers start paying their fair share”.
On 30 September Heinrich said he voted against advancing Senator Jon Husted’s Ratepayer Protection Act, calling it “all message and no substance” and saying: “If voluntary pledges and suggestions worked, families and small businesses wouldn’t be staring down rate hikes right now.”
The bill does much more than data-center pricing. Its fact sheet lists stronger federal backstop siting for interstate power lines, two-year and one-year deadlines for environmental impact statements and assessments, and a 150-day deadline for legal challenges under four environmental laws.
Where It Stands
At his 30 September press conference Heinrich said he would bring the bill “to the Senate floor later in November for honest, good faith debates”. On 25 September he and Whitehouse had said that “permitting negotiations are ongoing” and that senators should be able to read the text before voting.
Capito said she looks forward to working with colleagues in the Senate and the House, “and President Trump to get this essential legislation signed into law”.
The Structural Read
The section works at two levels. Federal Power Act section 228 sets the floor for retail service: no portion of the incremental cost of serving a covered load may be recovered from other customers. Section 2107(a) tells FERC to revise its 1994 transmission pricing policy so that computational loads are charged both embedded and incremental transmission cost.
The text also gives states room above that floor. A state may charge covered loads more than incremental cost and credit the surplus to other customers, auction access by present-value benefit to other ratepayers, and require a data center to bring its own generation.
As we read it, the exit and assurance rules are the ones aimed at a data-center operator’s risk: the recovery continues if the load leaves before the cost is recovered, and the money is secured before the utility builds.
Senator Martin Heinrich, on CNN, 7 October 2026
“we mandate that [data centers] have to pay for both the electricity and for any grid upgrades. And we prohibit passing those costs along to average ratepayers, be those residential customers or small businesses.”
Three Implications
DATA-CENTER DEVELOPERS The text says a utility must require financial assurances or contributions sufficient to cover the cost of a facility or upgrade before building it for a covered load.
UTILITIES AND STATES The text says a state may run an open season or competitive solicitation for covered loads and may treat them as a separate class with less favorable terms than other large loads.
EXISTING SITES The text says the rules apply to covered loads that interconnect on or after enactment, and that arrangements approved before then remain in effect.
The analysis argues: “The structural bottleneck isn’t computing, it’s electrons.”
As we read it, Section 2107 prices that bottleneck at the meter: the cost of the electrons and the wires to carry them would sit with the data center that needs them, not with the utility’s other customers.
Where the bill stands and the deadlines Section 2107 would set for FERC, counted from enactment. Floor timing is Heinrich’s stated plan.
What Is Not Established
As read on 11 October 2026: the posted text leaves the bill number and the committee of referral blank. We did not read a cost estimate, a vote count or statements from utilities or data-center operators in their own words.
The ratepayer rules apply only to covered loads that interconnect on or after enactment; an arrangement approved by the Commission or a state before then “shall remain in effect”, the text says. Section 2107 does not put a figure on the costs it would shift.
Business Engineer Framework
The State of AI Data Centers
A Business Engineer analysis of the power and infrastructure constraints under the AI build-out.
The posted text of a bipartisan Senate permitting deal would make new data-center loads of 20 megawatts or more pay the incremental cost of the grid built to serve them, with recovery continuing if they leave and payment secured before construction. Heinrich has said he will bring it to the Senate floor later in November, and the rule would apply only after enactment.
A note on sourcing. We read Section 2107 of the posted text of the Bipartisan American Affordability and Jobs Act of 2026 (dated 30 September 2026) and Senator Heinrich’s releases of 25 September, 30 September and 7 October 2026 in full on 11 October 2026; press reports were used only to find them. The posted text is a 417-page draft with the bill number left blank.
Nothing here is a judgement on the bill or a forecast of its passage, and nothing here is legal, financial or investment advice.
Gennaro Cuofano is a CRO and tech executive who has worked in AI since late 2015, starting with bringing NLP, natural-language generation, voice and chatbot products to the marketing industry. His background is in law and finance: he holds a Master's degree in Law and an International MBA with an emphasis on corporate finance (LUISS Business School and the University of San Diego, 2012), and worked as a financial analyst at a real-estate investment firm in San Diego and as an assistant controller. His work focuses on business model strategy, business engineering and, more broadly, structural analysis: how companies make money, read from their own filings. He created FourWeekMBA and leads research there and at The Business Engineer, his newsletter on AI and business strategy, with over 95,000 subscribers and more than 1,000 published analyses. His writing has also appeared on Entrepreneur, HackerNoon and Search Engine People. Find him on LinkedIn and Substack. See how we source.
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