The Trump administration is reportedly pushing the tech giants to publicly commit to a draft compact aimed at ensuring the rapid expansion of energy-intensive data centers does not drive up household electricity costs, strain water resources, or undermine grid reliability.
The broad components of the agreement, according to a POLITICO report on Tuesday, are:
Power Costs
The compact requires AI data center developers to bear 100% cost of any new power generation their facilities need and to sign long-term electricity contracts to prevent costs from shifting to other customers if projects fall through. Companies would also agree to cover the full cost of any present or future transmission upgrades needed to connect new data centers to the grid.
Additionally, the tech firms would commit to working with regulators to set power and transmission rates that protect, and ideally lower, residential electricity prices in areas where their data centers operate.
All Encompassing Rules
The principles would cover not only company-owned data centers but also leased or third-party-operated facilities to prevent firms from shifting impacts elsewhere.
Community Programme And Federal Support
The agreement would require companies to launch AI education programs in local communities and schools and adopt measures to reduce noise, traffic, and other neighborhood disruptions.
In return, the federal government would support faster grid interconnections for new data centers to the bulk power system.
The proposed agreement, which is still under review and may be subject to changes, is envisioned as a voluntary pact between President Donald Trump and major U.S. tech companies such as OpenAI, Microsoft (NASDAQ:MSFT), Google (NASDAQ:GOOGL) (NASDAQ:GOOG), Amazon (NASDAQ:AMZN), and Meta Platforms (NASDAQ:META) could be bound to a wide-ranging set of energy, water, and community principles under this initiative.
The administration plans to announce the initiative at a White House event, though it is unclear which companies will participate or have signed on.
White House did not immediately respond to Benzinga‘s request for comment.
Reining In Data Center Energy Costs
This move by the Trump administration follows a proposal that PJM Interconnection, the largest power grid operator in the U.S., hold an emergency auction allowing tech giants to bid on 15-year contracts for building new power plants.
Earlier, Microsoft (NASDAQ:MSFT) had pledged to adopt a “community-first” approach to its AI infrastructure expansion, ensuring that local electricity bills do not surge due to its operations, after Trump stated that he doesn’t want Americans to ‘pick up the tab.’
U.S. Energy Secretary Chris Wright rejected the claim that massive data centers are driving up American electricity bills, arguing that tech giants are eager to fund the necessary grid upgrades for the AI boom, rather than being the cause of rising electricity bills. Wright had also previously told POLITICO that the department is in talks with hyperscale developers to help lower electricity prices over the long term while also curbing current price increases.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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