The Trump Administration Wants to Protect Electricity Customers and Support Data Center Development. Here’s How.
This week, Reuters and Politico reported that the White House plans to expand the Ratepayer Protection Pledge by encouraging utilities, data center developers, and Republican governors to join the effort. The pledge rests on a simple principle: The technology companies driving the AI boom should pay the full cost of the electricity infrastructure they require, rather than shifting those costs onto American families.
That’s the right objective. The next step is finding a policy that actually achieves that.
Public concern over data centers has grown rapidly, driven less by opposition to artificial intelligence than by fears of higher electricity bills. New York Gov. Kathy Hochul recently responded by imposing a statewide moratorium on new data center construction. Other states are considering similar restrictions. Whether those concerns are justified or not, the political reality is clear: If policymakers cannot protect consumers from rising costs, they will eventually protect them by slowing development instead.
America needs a better option. The Trump administration should champion reforms that accomplish both goals at once: accelerate AI infrastructure while ensuring American families never have to subsidize development. Consumer-Regulated Electricity (CRE) offers exactly that solution by allowing developers to build and operate entirely private electricity networks outside the traditional regulated grid.
Today’s electricity system forces almost everyone, from homeowners to hyperscale data centers, to depend on the same network. That one-size-fits-all model increasingly does not serve either group well. Large customers may wait a decade or longer for service, while ordinary ratepayers worry that expanding the grid for massive new industrial loads will ultimately increase their own bills.
CRE separates those interests instead of forcing them together. Under this model, developers who need enormous amounts of electricity would finance, build, and operate new systems. And these new networks could serve any number of new customers. Developers would assume the investment risk and negotiate private contracts with new customers, who would receive electricity without waiting years for approval through the existing regulatory process. Just as important, households connected to the public grid would not be asked to finance infrastructure built for someone else’s business.
That distinction is what makes CRE superior to proposals requiring regulators to determine precisely how much of each grid upgrade should be paid for by data centers. Those debates quickly become fights over cost allocation. Utilities, industrial customers, consumer advocates, and regulators end up arguing over who should pay for increasingly complex grid investments.
CRE avoids that fight altogether. Instead of asking regulators to divide costs after the fact, it allows private investors to build separate infrastructure with their own capital from the beginning. The result is greater certainty for consumers, developers, utilities, and policymakers alike.
Perhaps more importantly, CRE begins to move the electricity industry toward something it has lacked for nearly a century: meaningful institutional competition.
Most American industries improve because entrepreneurs are free to experiment. Companies develop new technologies, business models, and production methods using private capital while bearing the consequences of success or failure. Electricity, by contrast, remains organized around regulatory structures designed when monopolies were thought to be the only practical way to provide power.
That assumption deserves another look. The most transformative period in the history of electricity came before today’s regulatory model fully took shape. During the late 19th century, inventors such as Thomas Edison and Nikola Tesla competed to develop better ways of generating and delivering electricity. Competing technologies, not centralized planning, produced the foundations of the modern electrical system.
CRE creates space for that kind of experimentation again. Companies could test new approaches to generation, reliability, storage, and network design without imposing risks on captive ratepayers. Failed ideas would remain isolated. Successful ones could spread throughout the industry.
The benefits extend beyond economics. America’s electrical grid has become increasingly interconnected, allowing disruptions to cascade across wide geographic regions. As cyber threats grow more sophisticated, concentrating critical infrastructure on a handful of massive, synchronized networks creates vulnerabilities. A future with multiple privately financed electricity networks would be more diverse, more adaptable, and ultimately more resilient.
Fortunately, this vision does not require dismantling the existing grid. Congress can clarify that fully private, intrastate electricity networks fall outside many of the federal statutes governing traditional utilities, while states can establish clear legal boundaries between public utilities and private off-grid providers. New Hampshire, Ohio, and Utah have already begun moving in this direction.
The White House deserves credit for recognizing that AI infrastructure should not come at the expense of American ratepayers. But fully protecting consumers demands more than a pledge—it requires giving companies another way to build.
Data centers may be the first beneficiaries of CRE, but they will not be the last. The greater opportunity is an electricity sector that becomes faster, more innovative, and more competitive because entrepreneurs are once again free to build new kinds of networks with their own capital at their own risk. That’s how America built many of its most successful industries, and it’s how we can ensure that the next generation of energy infrastructure protects consumers while powering the technologies of the future.
Cato research associate Michael Abi-Nader and Cato intern Sam McNamee contributed to this article.