New York moved to the head of the pack in protecting consumers from looming rate hikes resulting from the inadequately regulated boom in data center construction. Recently, Governor Hochul issued an executive order placing a one-year moratorium on the permitting of hyper-scale (50MW or more) data centers in New York State. The governor’s move gives state regulators time to more carefully consider the environmental impacts of these industrial behemoths and comes amid growing public calls for restricting the permitting or construction of data centers in communities across the state.

These data centers are used for a variety of purposes. They provide the backbone of the information “cloud,” processing digital transactions the place where much of our data is stored. A typical facility contains an enormous number of computers, and given the modern need for computing they are housed all over the country – indeed spread throughout the world.

The construction and use of these data centers is driving a rise in utility rates all across the nation and New York is not immune. During the past legislative session, lawmakers took a step toward slowing down the data center construction “race” to allow time to formulate policies to ensure the public is protected. The legislation, known as the Responsible Data Center Development Act, places a one-year moratorium on data center development while reasonable safeguards are created. The bill passed both houses overwhelmingly, with support across the political spectrum.

While the governor has yet to act on the legislation, she signed her executive order – essentially a more limited version of the bill – in order to “pause” approval of proposed and pending data center construction projects, while beginning to review public protections. The governor’s order targets projects using 50 megawatts of power or more. The legislation would impact proposals using 20 megawatts of power or more and has broader regulatory requirements.

Of course, her action led to predictable partisan and ideological sniping (some more ridiculous than others).

From the public’s perspective, it makes perfect sense to take a breath before embarking headlong into a data centers construction boom. However this “pause” is finally implemented (either through the order alone or in conjunction with the legislation), safeguards must be put in place. Among those safeguards should be measures that:

1. Insulate the public from getting stuck with the bill if the data center flops or falls short. New Yorkers should not be left “holding the bag” if data center projects go belly up or greatly underperform.
2. Make data centers’ permits and contracts available to the public without secrecy. New York has exemptions in its open public records law that can be used to keep these contracts secret. They must not be.
3. There must be regular, ongoing monitoring and public reporting of water use, as well as noise impacts.
4. Ensure that not one residential utility ratepayer dollar should be – directly or indirectly — used to subsidize data centers. Data centers are expected to need a fantastic amount of electricity; they must not be driving up utility rates for New Yorkers.
5. Not one electron from the existing grid should be used to power data centers. Another way to jack up utility rates to subsidize data centers is by diverting current electricity in the grid to power data centers. Then ratepayers are on the hook to come up with new energy capacity.

New York now has at least one year to get it right. The governor deserves credit for getting the ball rolling. Signing the legislation would also add protections. Regardless of how this plays out, it will be up to the public to watchdog the process carefully to make sure the public’s interests are served.