House advances bill to create regulatory framework for large data centers, debate centers on water use and economic thresholds

The Vermont House advanced H.7 27 on March 30, a bill that would establish a statutory regulatory framework for large data centers that use or can use 20 megawatts or more of power. The committee sponsor said the measure is designed to protect electric ratepayers, align projects with state environmental and equity policy, and require Public Utility Commission (PUC) oversight of large contracts.

Representative Sebelia (member from Dover), speaking for the House Committee on Energy and Digital Infrastructure, told colleagues, “This legislation establishes a proactive regulatory framework for the potential development of large scale data centers in Vermont,” and summarized that the bill would create a new chapter in Title 30, require PUC‑approved large load service equity contracts, and impose reporting and water‑use and decommissioning requirements.

Why it matters: A single 20‑megawatt facility can use roughly the same power as 15,000–20,000 Vermont homes, the sponsor said, and the bill aims to ensure that any project of that scale would be contractually and regulatory structured so other ratepayers do not shoulder disproportionate costs.

Key provisions and debate

- Threshold and definitions: The bill defines a data center by NAICS code (518210) and by the ability to use 20 MW or more, and directs the PUC to approve service contracts that allocate costs proportionally so other customers aren’t saddled with generation, transmission or distribution costs.

- Contract safeguards and collateral: The bill requires minimum payment obligations, collateral sufficient to mitigate stranded costs, and provisions for demand in excess of projections. Opponents warned the collateral requirement lacks a methodology. The member from Castleton argued the open‑ended collateral language could be used to make projects economically infeasible; the presenter said detailed analyses would occur for a given project and counsel had been consulted.

- Water and cooling: The bill prefers closed‑loop cooling and requires appropriate groundwater or surface water permits where withdrawals occur; it also prohibits adding PFAS to water discharged by data centers. Opponents pressed that a closed‑loop mandate could, in some configurations, increase consumptive water use and urged more clarity; supporters pointed to modern closed‑loop technology and national precedent for reduced water consumption.

- Reporting and decommissioning: Within three months of operation a data center must begin quarterly reporting to the PUC and Department of Public Service on water usage, energy usage, peak daily electricity usage and payments toward shared infrastructure. The bill tasks the commissioner of the PUC with drafting decommissioning recommendations by 12/15/2026.

Exchanges on the floor

The member from Castleton warned, “Vermont can have data centers or Vermont can have this bill. I do not believe we can have both,” raising concerns about the 20 MW cliff and novel contractual requirements. Representative Sebelia and other sponsors responded that the bill is precautionary — designed to apply standards only when facilities of that scale are proposed — and that existing Vermont facilities are far below the threshold.

Outcome and next steps

The House voted to amend H.7 27 as recommended by committee and ordered third reading. The amendment and third‑reading order were adopted by voice vote; committee votes and further technical work (including PUC rulemaking) are expected as the bill continues through the legislative process.

Speakers quoted in this report include Representative Sebelia (member from Dover) and the member from Castleton. The House record shows the committee reported favorably and that the House amended the bill and ordered third reading.