The bill creates a new regulatory structure for what it defines as “emerging large energy use facilities” — operations with a contract demand of 20 megawatts or more that are primarily engaged in data processing services.
The legislation reflects mounting concern over the speed and scale of data center electricity demand growth in the Pacific Northwest. Lawmakers note that data centers are projected to become the largest driver of regional load growth, with implications for energy affordability, reliability, water use, and environmental performance.
While acknowledging the economic benefits data centers have brought — including construction jobs and tax revenue, particularly in rural communities — legislators also highlight their intensive use of electricity, water, and refrigerants.
The bill outlines four core policy priorities:
A central component of the bill requires utilities serving these facilities to develop dedicated tariffs or policies by October 1, 2026. Investor-owned utilities must submit them for regulatory review, while consumer-owned utilities must adopt them through their governing bodies.
These tariffs must be structured to avoid cost shifts to other customers and prevent stranded infrastructure assets.
Required elements include:
The intent is to ensure that large new loads do not impose uncompensated financial risk on residential or small commercial ratepayers.
Beginning in 2031, qualifying facilities must certify that at least 80% of their annual energy and capacity requirements are met with renewable or nonemitting electricity from generation that began operation after January 1, 2026
By 2046, the requirement increases to 100% clean electricity
Compliance requires retirement of renewable energy credits (RECs) and coordination with serving utilities, with safeguards to prevent double counting.
Facility owners must publish sustainability reports detailing projected energy and water consumption, cooling technologies, refrigerant use, and air emissions.
Annual reporting to the Department of Ecology will include water consumption data, energy sourcing, and emissions information.
These provisions introduce a more structured disclosure framework than currently exists for large data infrastructure projects.
The bill also modifies how no-cost carbon allowances under Washington’s Climate Commitment Act are allocated. Beginning with emissions year 2029, utilities may not use free allowances for the primary benefit of emerging large energy use facilities.
This change further reinforces the principle that these facilities should bear their own compliance-related costs.
The legislation creates a limited sales and use tax exemption for eligible computer data centers located east of the Cascades that border another state and meet size thresholds.
However, the exemption includes:
The Department may issue no more than one exemption certificate per calendar year, and no new certificates may be issued after July 1, 2030.
For utilities, the bill introduces new compliance deadlines, tariff development obligations, and forecasting coordination requirements.
For data center developers, it signals a more formalized regulatory and cost-recovery environment in Washington, particularly for large-scale AI-driven facilities that materially affect grid planning.
The measure does not halt development. Instead, it establishes clearer financial, environmental, and operational guardrails for projects exceeding 20 megawatts.
With Senate committee approval secured, the bill now proceeds through the legislative process amid heightened scrutiny of how rapid digital infrastructure growth intersects with state energy policy.
