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Senate committee reviews H.727 amendment to regulate data centers, proposes $6–$7M annual fee for 20 MW facilities
Summary
Legislative Council walked senators through a strike‑all amendment to H.727 expanding PUC oversight of large‑load data center contracts, requiring site suitability and demand‑side measures, limiting combustion backup to emergencies and creating a new annual "energy transformation payment" estimated at about $6–$7 million for a 20 MW facility.
Maria Royal of Legislative Council walked a Senate committee through a strike‑all amendment to H.727 that would tighten regulatory oversight of large data centers, add demand‑side requirements and create an annual payment to fund energy transformation projects in host communities.
Royal said the amendment treats multiple noncontiguous sites under common management as a single "facility" for the 20‑megawatt threshold that triggers review and that the Public Utility Commission must find contracts serve "the general good of the state" and set out written rationales for its findings. The amendment would require data centers to provide collateral to prevent stranded costs, specify equitable cost allocation methods in PUC‑reviewed contracts and require the commission to conduct periodic contract reviews at intervals not to exceed two years.
On demand management, Royal described a site suitability analysis, consultation with the electric company and Efficiency Vermont, and a design requirement to maximize on‑site renewables and battery storage where technically feasible. She said combustion‑based backup generation would be allowed only during emergencies and that data centers should "first resort" to storage or on‑site renewable generation before running combustion generators.
The amendment also creates an "annual energy transformation payment" to a fund managed by the electric company to finance energy‑transformation projects in host and surrounding communities. Royal said the payment "shall be equal to 60% of the data center's electricity usage for the prior calendar year" multiplied by the alternative compliance payment rate (the base rate was cited as 6¢/kWh, currently a bit over 7¢ with inflation adjustments). Using a continuous 20 MW load as an example, she and the fiscal staff said that yields roughly $6 million to $7 million annually.
A Joint Fiscal Office representative confirmed the $6–$7 million estimate and clarified those payments would flow to electric companies (not into the state general fund) and would be used for projects consistent with the state's renewable energy standards. The committee asked for more detail about how credits and project overlap would be prorated and whether funds could be double‑counted with utility tier‑3 obligations.
Committee members had technical questions about load‑shedding priorities, virtual power plant participation and decommissioning standards; Royal noted the bill includes reporting requirements (quarterly public reports and an annual Department of Public Service report starting in 2028 if a contract exists). The committee did not vote; staff and fiscal analysts will provide further information before the bill is considered again.
