Vermont Legislature SmartTranscripts:

[Sen. Ann Cummings (Chair, Senate Finance)]: We are live. We are live. This is Senate Finance. We are back. We're still waiting for our drafter, but our sponsor, senator White, is here. So Senator, this is s two zero five, an acclimating to the temporary moratorium on AI data centers and report on the construction and operation of AI Data Centers in Vermont.

[Sen. Becca White (Sponsor of S.205)]: Thank you Madam Chair, and good afternoon everybody. I know it's like sleepy after lunchtime, so thank you for

[Sen. Ann Cummings (Chair, Senate Finance)]: your We're going to go through our list of reports to see what we can do and do not want to keep receiving.

[Sen. Becca White (Sponsor of S.205)]: Okay, so I'm the exciting You're start going to be

[Maria Royle (Legislative Counsel)]: well I hope to wake you up a

[Sen. Becca White (Sponsor of S.205)]: little bit this afternoon because this bill is extremely important. AI data centers are a growing concern nationally, and I wanna tell you a little bit why, about why I introduced this bill. I think this is a common sense pause on development when we are experiencing an exponential growth in an unregulated market, essentially. So, this bill addresses the growing and largely unregulated risk to Vermonter's infrastructure, environment and public resources using prevention of the rapid expansion of AI focused data centers. These facilities are not the same as a, oh hello. I'm explaining to them why I asked you to draft.

[Maria Royle (Legislative Counsel)]: I'm sure you're doing a much better job than I ever could, She you

[Sen. Becca White (Sponsor of S.205)]: can explain what's in the bill, I'll explain the intent. But these facilities are not the same as regular data centers. We have regular data centers in Vermont. These are massive industrial scale operations that put huge demands on water, electricity, and overall grid capacity. To put this in perspective, a single large AI data center could use up to 5,000,000 gallons of fresh water per day, and that's roughly the equivalent of the same amount of water used in a town of 10 to 50,000 people. That is Burlington, South Burlington and Colchester, basically. One of those towns uses the same amount of water per day as one of the potential data centers, AI data centers, that this bill would prevent from being built in the next five years. Even a medium sized data center can consume more than 100,000,000 gallons of water per day. AI data centers run hotter than traditional data centers, and these facilities require even more cooling and more water. Vermont and The US currently have no regulations that require AI data centers to use water efficient cooling technologies and no standards for governing how much water they pull. That means if one or more large AI data centers were built in Vermont, it would place major stress on municipal and state water systems. The energy usage is not just water and electricity. A single AI data center can use it is as electricity. A single AI data center can use as much electricity as 100,000 homes in a day. Between seven to 30 of that power, just to keep those servers from overheating. So not having a extreme detrimental explosion, essentially, due to overheating. And only about one quarter of the energy powering currently existing data centers nationwide actually comes from renewable sources. So we're essentially adding an electricity demand with no plan to meet the need. So I wanted to also note that when we use that type of electricity at such a great scale, it leads to skyrocketing electricity costs. We saw electricity rates have an increase of 21.3% from 2021 to 2024, which drastically outpaced inflation. And that was driven largely by the rapidly built out data centers that are continuing to escalate over time. We also We Vermont. No. That's national. Nationally. Okay. And that comes from so I'm I can cite a couple sources. There's a few I'm using largely what we know about energy use as US data centers amid the AI boom from the Pew Research Center, which I can share with folks, which isn't quite high. So essentially what this bill says is that Vermont needs to come up with some plans around AI data centers before we are subject to the extreme electricity rates, water usage, and general problems that come with AI data centers. So this would be a five year pause on those being built or composed. Particularly, this issue is close to my heart because we are starting to see towns in my district who are already coming up with their own data center AI bands for their towns. And I'm nervous that we're gonna end up with a patchwork of municipal regulations if we don't say, there's a plan in place. Don't worry about this right now. You don't need to come up with your own municipal plan to stop it. We don't need to invent new planning and zoning regulations against it. This is really meant to be a a pod. Yeah.

[Sen. Randy Brock (Member)]: Aren't there any AI data centers in the market?

[Sen. Becca White (Sponsor of S.205)]: No. Not at this well, I should say the way the bill there's AI data center Mhmm. In the way it's defined as in the bill. There are none.

[Sen. Randy Brock (Member)]: Right. That's great.

[Sen. Becca White (Sponsor of S.205)]: Yeah. And I would leave it to Yeah.

[Maria Royle (Legislative Counsel)]: I can happy to

[Sen. Becca White (Sponsor of S.205)]: go section by section. And

[Sen. Ann Cummings (Chair, Senate Finance)]: and you with one of our major utilities has already asked to testify. We do still have regulated utilities, and towns can deny building permits based on that you use up all your water capacity. Yeah, I've told if you are unzoned or don't have any low use on the regulations, you might get hit. Yeah. You might not have municipal water sewer either.

[Sen. Randy Brock (Member)]: Did you consider the notion of setting up a bill that had hurdles and approvals for data centers, either local or statewide?

[Sen. Becca White (Sponsor of S.205)]: Senator Brock, really appreciate that question. So for context, this bill is I'm coming at it from the idea of let's stop now, come up with regulation later. There is a bill on the house side that's looking at it to exactly your frame. Mhmm. What I'm nervous about is I think we're we don't have there's not enough trust right now that those regulations will come in a time before a municipality is potentially propositioned to build one of these. Mhmm. And I don't think our municipalities are currently set, and they're nervous and they're crying to create policies.

[Sen. Randy Brock (Member)]: I'm thinking of whether or not we could or should have thought about creating some statewide hurdles, if you will, Because the one thing that I do think about is if this is a future comparative, it's also a future opportunity. If we could capitalize on it as opposed to prohibiting it, if we could put some hurdles to ensure that in the event that we allow one, that it meets criteria that we would find as a state acceptable.

[Sen. Becca White (Sponsor of S.205)]: Yeah, I would really, if this committee comes up with solid hurdles that help, I think, address the concerns that Vermonters have, I would be very supportive of that. The reason I wanted to do a moratorium is I think it's gonna take us some time to figure that out. And I think in the absence of that, it would be good to say that we're not open for business yet on these projects. One piece I wanted to talk about was so far with just the rapid expansion of AI data centers, many municipalities who have been asked to home these sites have gone into lengthy legal battles against large billion dollar companies Mhmm. Who can throw the book at them. So I think that we and what we're seeing is communities responding and saying, we don't want these here. The municipality is trying to defend against that. And then lengthy expensive legal cases against small communities, especially farm and agriculture land is what they're using because it's flat. You know, I I think if we had the same type of regulation as you're describing, we wouldn't need this bill, but I don't know when we're gonna get that.

[Sen. Ann Cummings (Chair, Senate Finance)]: So when we pass something this year, I'd say that's awesome. So, yeah. I'm gonna have Maria walk us through. Thank you. And we will find out what kind of regulation we do have. We do have a lot more ways use planning and requirements than a lot of other states.

[Sen. Becca White (Sponsor of S.205)]: Madam Chair, I just want to say thank you for hearing this bill. I was surprised it came to this committee versus maybe natural resources, for example, or economic development even.

[Sen. Ann Cummings (Chair, Senate Finance)]: Hello. So, I need to take this. Oh, okay. Well, that's all. Stop talking. Please. Okay. Great. Good. Alright. What's the difference? Session. What was it? You thought it would. Okay. Yeah. But it's So Maria walked through this. And that's after. And then we'll get on to reports and we'll go home.

[Maria Royle (Legislative Counsel)]: Can I ask a quick question? Yeah. Do you want me to share my screen or do you have

[Sen. Ann Cummings (Chair, Senate Finance)]: that thing that be helpful? Because if anyone's watching at home, make sure. Yeah.

[Maria Royle (Legislative Counsel)]: Give me a second to enter the Zoom meeting. Share my screen.

[Sen. Ann Cummings (Chair, Senate Finance)]: It is doing something out there right now. It's a wing trip. Couple of flurries out. Exactly. It's Sorry. Worse. And I thought we pull ins. Yeah. It's like we have a couple of flurries. So it's gets worse.

[Maria Royle (Legislative Counsel)]: That's what I was say.

[Sen. Ann Cummings (Chair, Senate Finance)]: It always gets worse before it gets. It'll be. I don't know. I should be back. Tomorrow. It's not. Okay. Okay. There we go.

[Maria Royle (Legislative Counsel)]: Okay. Okay. Nice to be here. Maria Royal. Yeah.

[Sen. Ann Cummings (Chair, Senate Finance)]: So you should spend all year in here enough. Victory doesn't see

[Maria Royle (Legislative Counsel)]: you do it all. You had enough.

[Sen. Ann Cummings (Chair, Senate Finance)]: I think that's rough. You do one big utility year and that's it. This isn't property taxes. We're good. Yeah. So,

[Maria Royle (Legislative Counsel)]: Senator White actually gave a great introduction and kind of provided the context, some of initial context that I was going to do, and I think she did that beautifully. I think a question came up, are there data centers in Vermont? Obviously, no AI data centers. There are traditional data centers. I didn't get an exact number between two and four. But these are companies the definition of an AI data center varies. For purposes of this bill, it's a center that uses 100 megawatts of power. The data centers in Vermont, I think the one that I found, if this is accurate, uses about one megawatt of power. So not nearly the impact. And these are data centers that do a lot of cloud services. So data storage, any cloud services that you take advantage of, this is where it stores, this is where it's processed. A lot of businesses keep all of their software, follow online, it's all run through a data vendor. So those exist, they're here, they're very small. The definition yeah. Do

[Unidentified Committee Member]: you know if any of those circumvented our standard regulatory process like Act two fifty, local municipal zoning and so on? Is there a gaping loophole for data centers to be built that don't go through our all of our other regulatory processes?

[Maria Royle (Legislative Counsel)]: I'm not aware of any state regulatory processes. At the local level, I'm not as familiar with, you know, what they would trigger and what kind of review they might have. So, I'm not aware, but I can find out. We'll find

[Sen. Ann Cummings (Chair, Senate Finance)]: We'll can come find in and talk

[Maria Royle (Legislative Counsel)]: to And us about I should just be perfectly clear. This proposal involves several attorneys in the office, as you know. Ellen Chittenden is our energy expert, so to the extent you're looking at the energy and the climate effects. And Michael Brady handles water, air quality, so getting into the weeds of any of those issues, you'll definitely wanna hear from them as well. So let's maybe just walk through the bill and

[Sen. Ann Cummings (Chair, Senate Finance)]: then we can address things. But this isn't

[Maria Royle (Legislative Counsel)]: Add our pay time off.

[Sen. Ann Cummings (Chair, Senate Finance)]: What then we'll decide if we're gonna take it up and with what urgency. Sure. So,

[Maria Royle (Legislative Counsel)]: this proposes a moratorium that would end 07/01/2030. The purpose is, it says, to protect the public safety and welfare and safeguard the rights of ratepayers in Vermont. No person shall be permitted to operate an AI data center or to in any way begin site preparation for or commence construction of an AI data center in this state prior to 07/01/2030. The purpose of this temporary moratorium is to allow time for the appropriate regulatory entities to study and develop regulatory regime applicable to AI data centers in Vermont that best serves the general good. So, we'll go through the definitions and then you'll see that study and report back is done by the Public Utility Commission, which you would receive next session. So, in terms of the definitions, just so you know where I got them from. AI So, Data Center for purposes of this, are billed needs a facility that requires greater than 100 megawatts of new load dedicated to AI inference training, simulation, or synthetic data generation. One of the, as you know, the deployment of AI data centers has been a big issue for the current administration. Talk about private initiatives, the Stargate initiative, which are private companies that have formed a joint venture and indicated that they would invest, I think, $500,000,000,000 over the next four years, specifically on the AI data center infrastructure, which Trump, I think, the second day president Trump's second day of his and being in office started talking about,

[Sen. Randy Brock (Member)]: you

[Sen. Ann Cummings (Chair, Senate Finance)]: know,

[Maria Royle (Legislative Counsel)]: this sector of the industry. And since then, he has released a couple of relevant executive orders. One of them was released in July, and he basically asked federal agencies to accelerate the permitting that might apply federal permitting that would apply to data centers. In that executive order, there is a definition and it's identical to what's here. So I just followed kind of the federal definition in those executive order or one of those executive orders. But it's definitely something that different states are having lower thresholds, higher, but whatever you think is appropriate. Is just our conventional definition of person, anything, any corporate entity or individual. For purposes of this bill, ratepayer is basically any electric ratepayer other than an AI data center. And those are the definitions. So, this is kind of the the meat of the bill, the investigation and report. As I mentioned, it's done by the Public Utility Commission with input from the Department of Public Service and all other interested parties shall open an investigation into the construction and operation of AI data centers in Vermont. The purpose of the investigation is for the Commission to develop findings and recommendations related to the impact AI data center deployment would have in this state and the regulatory regime that would best serve the general good of the state. So, that report is due on or before January 15. It shall include findings and recommendations developed pursuant to the charge goes to the relevant standing committees. And then in terms of what should be taken under consideration in developing those findings and recommendations, you'll see in subsection d, the PUC shall consider the increased energy load required to power an AI data center, water consumption necessary to support the cooling of computing equipment in an AI data center. Three, the environmental impacts of an AI data center with respect to water quality and availability, air quality, local ecosystems, noise, emissions, and the availability of surrounding land for other purposes, including farming, conservation, recreation, and housing. Four, strategies for maintaining the reliability and security of the power grid. I think as you heard, because of the power demands, there would likely need to be significant upgrades to the power grid, the transmission lines, distribution, substations, etcetera. Five strategies for promoting energy efficiency and renewable energy initiatives consistent with Vermont's climate goals. Six, a cost allegation model that would hold all other electric ratepayers harmless from the increased energy demand necessary to operate an AI data center, including any associated cost for our local, state, or regional grid upgrades. So this, you've probably heard a lot about this skyrocketing utility bills in other states. As you know, electric companies, when they make the investments, they recover the cost of those investments, plus the return from ratepayers generally. So this is basically saying that a lot of other states have proposed this to the data centers would maybe in their own rate payer class and that any upgrades that they're requiring, they would be responsible for paying for in their rates so that other rate payers would not

[Sen. Ann Cummings (Chair, Senate Finance)]: Probably the closest we've come to this is IBM Global Foundries who was by far our largest user, and they wanted out. And so we have dealt with that with similar Yep. Yep. Once before. And we did large industrial utility.

[Sen. Randy Brock (Member)]: Yes. Just a question. Sure. And that is if you include subparagraph six there, in the event that the data center goes bankrupt, then why?

[Maria Royle (Legislative Counsel)]: That is an excellent question. That probably should be addressed, decommissioning or the stranded costs. So, I it probably should be addressed here explicitly because that's a huge issue.

[Sen. Randy Brock (Member)]: Huge issue.

[Maria Royle (Legislative Counsel)]: Making sure that what a lot of states have done is they've required terms in contracts between the electric company and the data center specifying it will be of a duration of at least ten to fifteen years. This amount of collateral will be available in the event the data center doesn't wanna go through or or the data center will be subject to term early termination fees to basically cover all the costs. Okay. That's a so an excellent point. Seven, the impact, both positive and negative, an AI data center would have on the Vermont economy, particularly regarding workforce opportunities, local businesses, and economic growth generally. The only other thing I just wanted to mention in terms of benefits, something that does come up for consideration is that sometimes ratepayers generally benefit from upgrades to the grid, particularly if renewable resources are available or made available. So looking holistically. Eight, environmental justice initiatives, particularly regarding the location of an AI data center. Local and state permitting requirements that would minimize any adverse effects of the construction and operation of AI data centers in Vermont. And then 10 is just a kind of a general catch all, any other matters deemed relevant by the PUC? And then are there particular questions about the language? Bill? Great. Because the only other thing that I was just gonna mention, you know, just something that I think we're all kind of some of us are paying attention to is what's happening at the federal level on whether there'll be any preemption issues. Yeah. President Trump's most recent executive order in December that relates to artificial intelligence, state law. Remember there was a moratorium? And then, what the name is it? Then it made the name of it. Insuring a national policy framework for AI. Basically, tasking senior advisors to identify state laws that are conflict with kind of the federal initiatives. That particular executive order focuses a lot on, like, actual regulation of the content, you know, kind of the software, the content, the algorithms. Not so much on the infrastructure. However, there is one provision. No no intent to preempt, no effort to preempting that executive order. But it does indicate that, again, some of the senior advisors should come up with legislative recommendations that could address permitting, generally applicable permitting standards. So that's something to just pay attention to. But again, that's Congress. And so Oh,

[Sen. Ann Cummings (Chair, Senate Finance)]: it has

[Maria Royle (Legislative Counsel)]: to What the president's doing by executive order? A lot of things are a little bit Yeah. You have that authority? It's, you know, it's kind of emergency. Is it national security? But if congress actually acts, they have authority over interstate commerce, and this is obviously the growth of this industry is interstate. So, it would have pretty extensive authority. That being said, I think there are a lot of states and municipalities that are concerned. So, it's getting a lot of attention. And then, the only other thing I was trying to think of analogous situations, you know, where a regulatory entity tried to preempt kind of citing issues, and I don't know if you remember, I think it was in 2018, the Federal Communications Commission issued a number, the small cell order trying to incentivize small cell deployment to support five g. And so there were things there like capping local permit fees. They and the the FCC actually preempted any state moratorium on small cell, which was upheld.

[Sen. Ann Cummings (Chair, Senate Finance)]: And it kept the bus off the floor. There's been a lot of very concerned.

[Maria Royle (Legislative Counsel)]: There were dinners about Yeah. There were radiofrequency emission. That's right. And then both in the small cell order and then in other areas like transmission deployment under FERC, it's not unusual to have a, like, what's called a shot clock, basically saying, okay, states, you have this much amount of time, you need to act within that time. So, are kind of things that would not be unheard of, but trying to balance the local interests with kind of the federal policy of.

[Sen. Ann Cummings (Chair, Senate Finance)]: Given the president administration, this is one where I I'm I'm already feeling like, what's the danger here versus if we call attention to ourselves, what the danger might be, and we don't know, but there's a risk.

[Maria Royle (Legislative Counsel)]: It's just good to be aware of. And then the other thing with you probably you might wanna hear from the department, and I will try to find what I have, which was produced by a federal agency, the name of which I cannot remember, but it talked about all of the requirements that a data center needs in terms of infrastructure, the transmission lines, water. It was very interesting to see, like, where the potential location Yeah. And so that kinda gives you

[Sen. Ann Cummings (Chair, Senate Finance)]: a sense of where they're looking and what might be I was wondering if anyone was actually looking at Vermont. That would be very helpful, Steve. Absolutely. Yep. So I'll I don't want this to be we're ban fracking, but we don't have anything to frack. So Right. People will

[Sen. Randy Brock (Member)]: Just real quick. In the research that you've done, do you have an idea of what a 100 megawatt facility is worth? I'm thinking, like, Ed Fund Grand Les Growth. Like, what what that would

[Maria Royle (Legislative Counsel)]: have property. Yeah. What Well, I'm actually glad you said that because I don't know the answer to that, but that is some states are looking at kind of revenue generation now, whether it's through property taxes, sales taxes, or first receipt, right? Because of these facilities, that might be beneficial to

[Sen. Ann Cummings (Chair, Senate Finance)]: the state. I mean, I think that's why some states initially Okay. Went into Questions for Maria.

[Sen. Randy Brock (Member)]: Did Belco just do an upgrade to the transmission lines? I saw them come through my town. 10.

[Sen. Ann Cummings (Chair, Senate Finance)]: Is it about?

[Sen. Randy Brock (Member)]: I know this

[Sen. Ann Cummings (Chair, Senate Finance)]: is about Major one.

[Maria Royle (Legislative Counsel)]: Did they always They're kind of working on it, whether they've done a major upgrade, I don't know.

[Sen. Ann Cummings (Chair, Senate Finance)]: That would ten years ago. There was a major transmission upgrade, it was obviously very controversial. They if they were going through your yard, I heard about a lot of sheep born with deformities. It was again, the the radio or waves. And

[Maria Royle (Legislative Counsel)]: And they they're required to do a long range plan. I don't know when the last it's updated over two years, but let me find that

[Sen. Ann Cummings (Chair, Senate Finance)]: and just see. We will definitely have the utilities in. One of them has already requested to come in. Oh, cool. Unlike many, if not most states, we did not unregulate our electric utilities. We do have more control than a lot of other states. I know Massachusetts deregulated. Did most of the New England state?

[Maria Royle (Legislative Counsel)]: No. I think that's

[Sen. Ann Cummings (Chair, Senate Finance)]: kind of kind of an anomaly. We are. And it it was my first year, and it was a steep learning curve. Yeah. We we, in the end, decided not to do rate.

[Maria Royle (Legislative Counsel)]: And we wanna also is an outlier because it's those distribution utilities that owns Velco. Right? And so it's which was authorized by the PUC. So that's a statewide transmission utility owned by the local distribution utilities.

[Sen. Ann Cummings (Chair, Senate Finance)]: But also I know. Yeah. Okay. Any other questions? Thank you. I'm not going to hold you to the report, so I'm gonna let you read them. Read the dark print of the cover letter. If we don't respond by next Friday, reports will receive unwanted and unnecessary and will be discontinued. I'm

[Maria Royle (Legislative Counsel)]: gonna try and

[Sen. Ann Cummings (Chair, Senate Finance)]: put them in tomorrow. I've got one witness, which is an hour. It's not any huge update. Yeah.