You Can’t Regulate Your Way to More Electricity

Electricity demand from data centers is surging, and regulators are increasingly treating that growth as a problem to manage rather than a market outcome to accommodate. Senators Elizabeth Warren (D-Mass.) and Josh Hawley (R-Mo.) have pushed the Energy Information Administration (EIA) to impose new reporting requirements on large data center energy users, arguing that voluntary transparency is insufficient. According to a recent report, the Energy Information Administration (EIA) has confirmed it is developing a mandatory nationwide survey of data centers in response to the senators’ joint letter. The agency has already launched three voluntary pilot surveys, the results of which will help shape the final reporting framework. This is another step toward treating energy demand as something to be centrally managed rather than efficiently met.

This reporting mandate should help “prevent large companies from increasing electricity costs for American families,” Senators Warren and Hawley stated in the letter. The senators seek to encumber the operators of data centers with reams of paperwork—and then dispatch regulators to entangle them in red tape. Unfortunately, they seem to recognize neither the importance of this rapidly growing sector to the U.S. economy nor the constraints of the current electricity market.

Senator Warren told Wired that “Americans deserve to know how much energy data centers are sucking up and what that’s doing to their utility bills.” Yet existing research by independent analysts and government agencies on the energy effects of data centers already supplies many of the answers she suggests are missing. Data centers consumed roughly 4.4% of U.S. electricity in 2024. While their share is projected to more than double by 2030, evidence that data centers affected electricity prices nationwide was lacking at the end of 2024. Along with government barriers to power generation, higher natural gas prices and grid infrastructure upgrades were largely responsible for rising rates.

More importantly, Senator Warren’s myopic depiction of data centers casts them as parasites “sucking up” energy at the expense of households. Far from it: data centers are the physical capital of a digital economy—the critical infrastructure on which innovation and growth depend.