PJM Interconnection, the grid operator serving 65 million people across 13 states, announced last month that it failed to procure enough power to meet reliability targets for summer 2027. That's never happened before. The shortfall is 6.6 gigawatts, roughly equivalent to six nuclear plants. Data centers are the reason. They now account for 30 of the 32 gigawatts of projected load growth through 2030. Interconnection queues that used to take a year or two now stretch to four to six years. Capacity prices spiked from $28.92 per megawatt-day in 2024/2025 to $329.17 in 2026/2027.
Senator Tom Cotton thinks he has a solution. On January 7, he introduced S. 3585, the Decentralized Access to Technology Alternatives Act of 2026, better known as the DATA Act. The bill would let data centers build their own power plants and operate completely outside federal electricity regulation, as long as they stay off the grid.
If you're planning a data center, evaluating power strategies, or investing in companies that need massive electricity supply, this bill matters. But what it actually delivers is more complicated than the headlines suggest.
What the DATA Act Does
The bill creates a new legal category: a "consumer-regulated electric utility," or CREU. Think of it as a private power system. A CREU serves new loads not currently served by existing utilities, stays physically disconnected from the bulk power system, and operates independently from regulated utilities.
Meet those requirements, and you're exempt from the Federal Power Act (16 U.S.C. § 824) and all the FERC jurisdiction that comes with it. That means no rate regulation, no reliability standards, no interconnection rules, no transmission planning requirements, and no merger approval for power deals. The bill also exempts CREUs from the Public Utility Regulatory Policies Act (PURPA) and the Public Utility Holding Company Act (PUHCA).
The core appeal is speed. Building a data center in PJM territory today means waiting years for interconnection studies, negotiating with grid operators, and hoping your queue position survives delays. The DATA Act offers a bypass: build your own power plant, stay disconnected, and skip the federal regulatory apparatus entirely.
There's a bright-line rule built into the bill. If your CREU connects to any part of the bulk power system, even once, you lose exempt status and become subject to federal regulation. The bill's authors designed this as a feature, not a bug. The logic: if you're not touching the grid, you can't destabilize it, so you don't need grid-focused regulation.
The Problem the Bill Doesn't Solve
Here's where it gets complicated. The bill addresses federal regulation. It doesn't touch state regulation.
Every state has its own utility regulatory framework. Most grant utilities exclusive service territories, which means the legal right to serve every customer in a defined area. These rights come from state law, not federal law. The DATA Act doesn't preempt them.
So you could build a CREU that qualifies for federal exemption, but still face a state public utility commission arguing that the local utility has the exclusive right to serve you. Without additional state legislation, it's unclear how a CREU customer would escape state utility regulation just because it escaped federal regulation.
New Hampshire figured this out. In 2025, the state passed HB 672, which explicitly declares that off-grid electricity providers are not public utilities and exempts them from state PUC oversight. The law requires that the system not connect to existing transmission or distribution for primary or backup supply and operate independently from existing utilities.
Utah took a different approach. Its 2025 large-load law says that if a utility can't serve a large customer within the requested timeframe, the utility isn't obligated to serve them, and the customer can contract with other generators.
Texas requires data centers to bring their own power as a condition of grid access.
The DATA Act would be most powerful in states that have already addressed this issue at the state level. In states that haven't, the federal exemption removes one layer of regulation while leaving another intact. Data center operators would need to work both federal and state strategies, potentially lobbying for state-level companion legislation.
What Off-Grid Power Actually Looks Like
The DATA Act doesn't tell you how to build off-grid power. It just removes federal barriers if you do. So what power sources can actually deliver utility-scale electricity without a grid connection?
The market is already answering this.
Natural gas turbines are the fastest path. xAI's Memphis Supercluster runs on gas turbines supplied by VoltaGrid. Crusoe, building OpenAI's Stargate facility in Abilene, Texas, acquired 29 gas turbines capable of producing 34 megawatts each. Chevron and GE Vernova announced a partnership in early 2025 to develop multi-gigawatt co-located gas plants for data centers. Gas turbines can be permitted and installed in months, not years. The tradeoff is emissions: a gas-fired data center will face local air quality permitting and potential opposition from environmental groups.
Nuclear is where the big money is flowing. Amazon bought a data center adjacent to a Pennsylvania nuclear plant with 300 megawatts of behind-the-meter power and led a $500 million financing round for X-energy's small modular reactor program, targeting 5 gigawatts by 2039. Microsoft committed $1.6 billion to restart Three Mile Island Unit 1, now called the Crane Clean Energy Center, with operations targeted for 2028. Google has a 500-megawatt development agreement with Kairos Power for molten salt reactors.
The challenge with nuclear is timeline. SMRs won't be cost-competitive before 2035, according to Lux Research, and first-of-a-kind reactors could cost three times more than natural gas. If you need power in the next two to three years, nuclear isn't the answer. If you're building for the 2030s, it might be.
The DATA Act makes these behind-the-meter strategies more attractive by removing federal regulatory uncertainty. But it doesn't change the underlying economics or construction timelines.
Board Questions You Should Be Ready to Answer
If you're a data center operator or a company with significant power needs, expect questions from your board. Here's what to be ready for.
What's your power strategy, and how does this bill affect it? If you're currently in an interconnection queue, you have a new option to consider: abandon the queue and go off-grid. But that's a massive capital decision. Off-grid power means building or contracting for generation assets, not just paying utility rates. Your CFO needs to model both paths.
What's the state-level situation? The DATA Act helps most in states that have addressed service territory issues. If your planned facility is in Virginia, where data center load is concentrated, has the state passed companion legislation? So far, no. Virginia's 2026 legislative session is focused on cost allocation for grid-connected data centers. The state is requiring them to pay more for infrastructure through a new rate class, not enabling off-grid alternatives. Dominion's service territory rights remain intact. The federal exemption alone may not be enough.
What's the timeline advantage, really? The DATA Act's value proposition is speed. But gas turbine projects still need air quality permits. Solar and battery projects need land use approvals. The bill removes FERC from the equation, but it doesn't eliminate permitting entirely. Your ops team should estimate realistic timelines under both grid-connected and off-grid scenarios.
How does this affect acquisition targets? If you're acquiring companies with data center assets, their power arrangements just became a diligence item. A facility with secured grid interconnection has different risk characteristics than one planning to go off-grid. A facility that connected to the grid but wants to disconnect faces questions about whether it can qualify for CREU status.
The Utility Reaction
Utilities are expected to fight this bill. Every megawatt that goes off-grid is a megawatt they don't sell. Mike Jacobs at the Union of Concerned Scientists put it bluntly: utilities will see this as a direct threat to their revenue.
But the opposition may be more nuanced. Some utilities are already struggling to serve data center demand. PPL Electric Utilities in Pennsylvania has 60 gigawatts of data center interest in its service territory and 13 gigawatts in advanced planning stages. If even a fraction of that materializes, PPL faces a 6-gigawatt generation shortfall. For utilities that can't serve the load anyway, off-grid data centers might be a relief rather than a threat.
The Electric Cooperatives of Arkansas, in Cotton's home state, said they share his commitment to preventing data centers from increasing costs for residential consumers. That's not opposition. That's conditional support.
The political framing matters. Cotton is positioning this as consumer protection: keep data centers from driving up residential rates by letting them build their own power. Environmental groups will counter that off-grid gas plants increase pollution without grid-level emissions standards. Both arguments will shape the bill's path through committee.
What This Means for Maryland
Maryland is in an odd spot. Unlike Virginia, Maryland utilities aren't projecting dramatic load growth from data centers. BGE's peak load is expected to decline by 2030, and Pepco's is forecast to rise by only 5 megawatts. But Maryland ratepayers still feel the pain. They're paying for PJM-wide infrastructure costs driven largely by Northern Virginia's data center boom. The Maryland Office of People's Counsel has been vocal that "residential electric customers are being asked to pay hundreds of millions for infrastructure being built to support out-of-state data centers."
The state has no off-grid exemption legislation. Like Virginia, Maryland's 2026 legislative focus is on grid-connected data centers:
HB 900 (2025): Required utilities to create new rate schedules for large-load customers, with PSC approval of tariffs by January 1, 2026. The bill's stated intent: residential customers "should not bear the financial risks associated with large load customers interconnecting to the electric system."
Sen. Katie Fry Hester's 2026 bill: Would require data centers above a certain size to receive a PSC certificate to operate, adding state scrutiny focused on energy usage.
Del. Lorig Charkoudian's 2026 bill: Would encourage data centers to curtail power during peak periods to reduce grid strain.
Governor Moore's December 2025 executive order envisions data centers using "best practices" including bringing their own power generation. That aligns conceptually with the DATA Act. But there's a gap between executive vision and statutory authority. The PSC still regulates utilities, and BGE and Pepco retain their service territory rights. A data center wanting to go fully off-grid under the DATA Act would need to clear both federal exemption (which the bill provides) and state regulatory approval (which Maryland hasn't addressed).
For Maryland-based companies evaluating data center investments, the calculus is different than in Virginia. The grid capacity constraints are less severe locally, but the cost allocation question is live. If you're building in Maryland, you're not escaping the PJM capacity cost problem. You're just not adding to it as dramatically as a Northern Virginia facility would.
What We're Watching
State companion legislation. The DATA Act's effectiveness depends on state-level action. Watch for bills in Virginia, Maryland, Ohio, Pennsylvania, and Texas that address service territory rights for off-grid providers. New Hampshire's HB 672 is the template.
Utility commission responses. Even without legislation, state PUCs may issue guidance on how they'll treat off-grid large loads. Some may welcome the capacity relief. Others may defend service territory rights.
FERC's position. The bill explicitly removes FERC jurisdiction over CREUs, but FERC Commissioners have been vocal about grid reliability concerns. Expect comments from current Commissioners on whether this bill helps or hurts their reliability mandate.
The Arkansas facilities. AVAIO Digital announced a 1-gigawatt data center project in Little Rock, which would consume over 5% of Arkansas's entire electric capacity. Google is building in West Memphis with Entergy supplying power via a $1.6 billion solar project. These projects will test whether the DATA Act's framework works in practice in Cotton's home state.
Practical Takeaways
Evaluate your interconnection queue position. If you're facing a multi-year wait for grid connection, model the off-grid alternative. The DATA Act changes the federal regulatory equation, but not the capital or operational requirements.
Map your state's utility law. Federal exemption isn't enough if state law grants your local utility exclusive service rights. Check whether your state has passed or is considering off-grid provider legislation.
Engage with your utility early. Some utilities may prefer off-grid solutions to adding load they can't serve. Others will fight it. Understanding your utility's position before committing to a strategy saves time.
Update your power supply diligence framework. For M&A transactions involving data centers, add CREU eligibility and state regulatory status to your checklist. The power strategy is now a material term.
Budget for generation assets, not just power costs. Off-grid means owning or contracting for generation. That's a different capital structure than paying utility rates. Your finance team needs to model the full cost, including fuel, maintenance, and replacement cycles.
Watch for air quality permitting issues. Gas turbines can be permitted faster than grid interconnection, but they still require local air permits. Factor that into your timeline estimates.
The DATA Act offers data centers a new path, but it's not a shortcut. Federal exemption is only part of the equation. The real question is whether states will follow, and whether off-grid economics work for your specific project.