Opinion: Vermont has the tools to keep data centers in check

Vermonters are right to ask tough questions about data centers. We’ve seen what can happen in states that aren’t prepared.

But the choice isn’t between banning data centers and allowing a free-for-all.

Vermont is already well-prepared. We have some of the strongest energy, environmental and land-use regulations in the country.

That’s important context that’s been missing from most of the reporting and the politicized communications Vermonters have been hearing.

Last fall, the Scott administration reviewed the laws and regulations that would apply to a large data center in Vermont. We reached a clear conclusion: Vermont’s existing regulatory system protects ratepayers, the environment and gives the state the authority to make a data center pay for any cost it might create.

There’s no data center crisis coming to Vermont.

In addition, Gov. Phil Scott has said he’d support a short moratorium — not a system with consequences for employers that are not data centers — while Vermont monitors federal regulations currently being proposed in Congress, new data center interconnection requirements being developed in New England, and while the states and the federal government develop new regulations for AI.

That’s a very different —and more economically responsible — approach than creating a new regulatory system that bans an entire industry, could be applied to all large energy users, and sends a very negative message to existing and future employers who are not data centers.

The Legislature’s hasty approach, on the other hand, would have been bad for our economy in areas unrelated to data centers themselves.

That distinction — and big-picture leadership — matters.

The Scott administration is fully committed to protecting Vermonters and the environment. We also need good jobs, employers and economic growth. Gov. Scott and his team know that we can do both.

Here’s how the existing regulations work: Before serving any large new customer, an electric utility must first determine what effect the demand would have on the grid and what upgrades would be necessary.

The basic idea is simple: the “cost causer” pays.

Vermont law also requires regulators to examine impacts on customers. And any electricity supplied to a new large user would be subject to an aggressive renewable energy standard. Vermont’s portfolio is currently 92% “non-emitting” and required to be nearly 100% by 2030.

If serving a large new load requires grid upgrades, the utility must obtain a “Certificate of Public Good” (CPG). That’s a comprehensive, public process examining reliability, ratepayer impacts, environmental effects and whether the project serves Vermont. Throughout that process, the Department of Public Service represents the public interest.

And this process is just one layer of protection. There are several others.

Something like a data center would likely face an Act 250 review and be required to receive numerous environmental permits, with many opportunities for public participation.

The larger the facility, the greater the scrutiny.

And none of this is hypothetical.

Vermont already has big employers using very large amounts of electricity. Our regulatory system has decades of experience evaluating whether a project is in the public interest.

Could Vermont improve these protections? Sure.

One effective improvement would be to add a “bring your own clean power” requirement for new employers with very large energy demands.

There’s another part of this discussion that’s often overlooked.

A properly regulated large employer that pays its own way can actually lower costs for everyone else.

That’s one of the successes Gov. Scott recently highlighted at GlobalFoundries in Essex Junction, where about six megawatts of new on-site solar and a 16-megawatt battery system are now helping secure great jobs in an important sector, and saving ratepayers more than $40 million over the next 25 years.

So, as Vermonters hear more about data centers, it’s important to separate legitimate concerns from political scare tactics. The problems we’ve seen elsewhere would never be allowed here — and certainly not by Gov. Scott.

His direction to us is clear: Protect Vermont. Require large energy users to pay their own way. Strengthen safeguards where necessary. And always keep the door open to jobs and responsible economic growth — because Vermont needs more of both.

Kerrick Johnson is the commissioner of the Vermont Department of Public Service.