Late this morning, the Senate Natural Resources & Energy Committee voted 5-0 — unanimously, with bipartisan support — to advance a far stronger version of H.727, the data center regulation bill, than passed the Vermont House earlier this year. The bill now heads to the full Senate floor.
VPIRG has been deep in this work for months. Here’s what the bill gets right, where it differs from what we were pushing for, and why we’re urging Vermonters to contact their senators in support before the floor vote.
Why this matters
Data centers are arriving in communities across the country faster than regulators can keep up — and in state after state, the story has been the same: utilities build enormous new infrastructure to serve these facilities and ordinary ratepayers end up paying more for their electricity.
To be clear, Vermont already has stronger ratepayer and environmental protections than many states — but that in no way changes that we should approach this with a “better safe than sorry” mentality.
On top of creating very real ratepayer impacts, many data centers have been powered with diesel and gas generators not just in emergencies, but routinely, with real consequences for local air quality and carbon pollution. There’s a single data center in Memphis that xAI — Elon Musk’s AI company — powered with dozens of gas generators that would create 10% of the total air pollution emitted in the entire state of Vermont. From one facility.
Vermont has a narrow window to get ahead of this before it arrives on our doorstep. This bill is how we do that.
What the bill does
The bill requires that Vermont regulators and electric utilities, in the bill’s own words, “ensure that other ratepayer classes are insulated from all costs associated with data center deployment.” Not reduced. Not mitigated. Insulated from all costs. That language matters, and we, our allies, and legislators pushed hard for it.
Let me be clear: of course Vermont regulators and utilities want to protect Vermont ratepayers. But we’re talking about companies worth billions or even trillions of dollars. H.727’s clear, unambiguous language ensures that they have the tools they need to get that job done, even when dealing with the largest corporations in history.
The bill also includes critical climate protections. Data centers will be required to:
- Pay to reduce climate pollution and energy bills. Data centers will have to make substantial annual payments to support energy transformation work like weatherization, EV and heat pump incentives, EV charging infrastructure, and more. That’s not just good for the climate — it would lower energy costs for thousands or even tens of thousands of Vermonters.
- Maximize on-site renewables. Data centers must be designed and built to maximize the construction and operation of on-site renewable energy generation — and renewables that create air pollution don’t count. That’s a stronger standard than simply buying credits for renewables that already exist somewhere else.
- Support Virtual Power Plants. Data centers will be required to participate in a Virtual Power Plant — a network of distributed energy resources like batteries, solar, EV chargers and more, coordinated to reduce the strain on the grid. This means the data center has to help stabilize the grid rather than strain it, and also provides the opportunity for additional benefits such as bolstering community resilience.
- No “emergency” generator abuse. The bill restricts combustion-based backup generation to genuine power failures and interruptions only — and requires data centers to prioritize battery storage and on-site renewables instead. What’s happened in so many states, where AI companies have deployed massive fossil fuel generators as workarounds, will not happen here under this law.
The bill also contains provisions to protect Vermont’s water and limit both water use and pollution, with our allies at the Vermont Natural Resources Council and Lake Champlain Committee leading on those portions.
What wasn’t included
We pushed hard for a requirement that data centers be powered exclusively with newly built renewable energy. Legislators ultimately heard concerns about renewables being slowed down because of the Trump Administration’s actions, and the committee landed on the energy transformation payment described above as a compromise — to keep carbon pollution under control without laying out a requirement on new renewables that would be potentially unattainable in the near term.
What happens next — and how you can help
This bill is a strong, precedent-setting step, but it still needs to pass the full Senate. We’re urging all Vermonters to contact their senators before the floor vote and let them know they support H.727 and want it kept strong.
To put the stakes in perspective: the average U.S. data center is projected to nearly double in size by 2028, and some individual facilities being planned today would consume more electricity than all of Vermont combined. Getting these rules right — right now — is exactly the kind of precautionary approach that protects Vermonters for decades to come.