Democrats see Georgia's failure to curb data centers as an electoral gift

ATLANTA (AP) — Georgia state lawmakers spent months debating ideas to curb the impact of data centers. But as their annual legislative session ended Thursday, they did nothing.

Now with election season upon them, lawmakers are returning home to find local communities up in arms against the warehouses full of computers that power artificial intelligence.

“I think they failed us, that's what I think” said Judy Mullis, an activist fighting plans for a data center near Newnan, southwest of Atlanta. “I think they had the opportunity to do the right thing, and they didn't. I'm so tired of them prioritizing big money.”

Georgia has become one of the country's top sites for new data centers, thanks to utilities eager to sell electricity and tax breaks estimated to cost state and local governments nearly $3 billion in the year beginning July 1.

That gold rush has inflamed opposition, even where business-friendly Republicans dominate local politics. Democrats hope to harness that anger to gain ground in the battleground state, a potential model as the party plots a path back to power around the country in the midterm elections.

Last year, opposition to data centers and discontent over rising electricity rates helped Democrats win upset victories over incumbent Republicans in statewide elections for the Georgia Public Service Commission, which regulates utilities. This year, they want to win the governor's office for the first time in 24 years and advance toward a majority in the 180-member state House.

Cyndie Hutchings, another activist, said opposition to data centers has the potential to swing elections. She's running as a Democrat to oust Vance Smith, a longtime Republican state representative, in a district southwest of Atlanta.

“They tell me that they are lifelong Republican voters, but this has changed the way they’re looking at everything,” Hutchings said.

Mullis said she's one of them. She said she used to be a Republican but wants to elect officials who will act on data centers, and she voted for Democrats “for the first time ever” in the utility commission race.

A charged debate

Georgia lawmakers never seriously considered calls for a moratorium on new data centers. But they did debate stricter rules to protect other electricity ratepayers from shouldering costs.

The Public Service Commission passed rules last year that the five commissioners said would protect Georgia Power customers, from paying for generation or transmission investments needed to serve data centers. But commissioners also approved a huge expansion in electric generating capacity by Georgia Power, is a subsidiary of Atlanta-based Southern Co.

The utility said fears of higher rates are misplaced, pointing to an electricity rate freeze and projections that data center revenue could reduce future rates.

“Data center growth in our state means large energy users pay more so you pay less,” spokesperson Matthew Kent said in a statement Friday.

But critics continue to warn that residential and other customers could end up on the hook.

“The No. 1 concern that we heard pretty much consistently across the board was the residential ratepayers, they were concerned about costs that would be inflicted on them from the infrastructure investments and data centers and their rates going up based on the basic supply-and-demand principles,” said state Rep. Brad Thomas, a Republican who chaired a special committee looking at resource usage.

One legislative idea was to write existing commission rules into law. But Republican state Sen. Chuck Hufstetler said current language is “extremely weak and doesn’t protect the consumers," and he joined with Democrats to try to force stronger language earlier in the session.

The move was blocked when Republican Senate leaders — including Lt. Gov. Burt Jones, who is running for governor — abruptly adjourned that day, prompting howls from Democrats.

Tax breaks

Efforts to restrict tax breaks for data centers also fell short despite widespread interest from lawmakers.

Republican Gov. Brian Kemp vetoed a bill to end data center tax breaks in 2024, but the issue became more urgent as their value ballooned into the billions. The House, though, never considered Senate proposals to curtail tax breaks.

Khara Boender of the Data Center Coalition, a trade group, said Friday that the legislation “would have discouraged future investment and signaled that Georgia is closed for business.”

Jones has been accused of favoring data centers because his family owns an interest in a real estate development that's courting them. He said in a Friday statement that it was unfortunate that the House didn't act. “Like President Trump, I believe Georgia ratepayers should not foot the bill for the energy demands of data centers,” Jones said.

Others see the strong political influence of Georgia Power or the big money backing the data centers, which can boost property tax revenue at a time when local governments are under pressure to cut taxes for other property owners.