wa-law.org > bill > 2025-26 > SB 6171 > Original Bill
The legislature finds that data centers are emerging large energy use facilities that have the potential to significantly affect Washington's energy affordability and reliability, local communities, jobs, environment, and economy.
Data centers are projected to grow rapidly over the next several years, making up the largest source of expected electricity load growth in the Pacific Northwest. The legislature established tax incentives for data centers starting in 2010. However, since that time, the data center industry has undergone major changes. Data centers are growing larger to support artificial intelligence, and there is high uncertainty about many aspects of the future of this rapidly evolving, emerging industry.
The development of data centers has brought benefits including construction jobs and significant new tax revenues to Washington, especially to rural communities. Data centers are also major users of electricity, water, and refrigerant chemicals, though information about data center resource use and environmental impacts is difficult if not impossible for the public to access.
The legislature intends to enact policies governing these emerging large energy use facilities, currently defined as data centers and cryptocurrency facilities, while recognizing that other such industries may emerge in the future with their facilities requiring similar policies.
For emerging large energy use facilities, the legislature's policy priorities are affordability, grid reliability, transparency, and environmental protection. The legislature intends to protect energy affordability for consumers; ensure that data center energy demands do not harm the reliability of the electric grid; require transparency about energy, water, and refrigerant use; and require the use of 100 percent clean energy over time.
The technology industry plays an important role in Washingtonians' lives and in the state's economy. The legislature intends to require data centers to meet a high standard for performance, building on the industry's ability to innovate and lead, while protecting and delivering benefits to Washington consumers, workers, communities, and environment.
The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
"Biomass generation" has the same meaning as "biomass energy" defined in RCW 19.285.030.
"Bonneville power administration system mix" means a generation mix sold by the Bonneville power administration that is net of any resource specific sales.
"Commission" means the utilities and transportation commission.
"Conservation" means an increase in efficiency in the use of energy use that yields a decrease in energy consumption while providing the same or higher levels of service. Conservation includes low-income weatherization programs.
"Consumer-owned utility" means a municipal electric utility formed under Title 35 RCW, a public utility district formed under Title 54 RCW, an irrigation district formed under chapter 87.03 RCW, a cooperative formed under chapter 23.86 RCW, a mutual corporation or association formed under chapter 24.06 RCW, or a port district formed under Title 53 RCW, that is engaged in the business of distributing electricity to at least one retail electric customer in the state.
"Declared resource" means an electricity source specifically identified by a retail supplier to serve retail electric customers. A declared resource includes a stated quantity of electricity tied directly to a specified generation facility or set of facilities either through ownership or contract purchase, or a contractual right to a stated quantity of electricity from a specified generation facility or set of facilities.
"Demand response" has the same meaning as in RCW 19.405.020.
"Department" means the department of commerce.
"Electric meters in service" means those meters that record in at least nine of twelve calendar months in any calendar year not less than two hundred fifty kilowatt-hours per month.
"Electric utility" means a consumer-owned or investor-owned utility as defined in this section.
"Electricity" means electric energy measured in kilowatt-hours, or electric capacity measured in kilowatts, or both.
"Electricity product" means the electrical energy produced by a generating facility or facilities that a retail supplier sells or offers to sell to retail electric customers in the state of Washington, provided that nothing in this title shall be construed to mean that electricity is a good or product for the purposes of Title 62A RCW, or any other purpose. It does not include electrical energy generated on-site at a retail electric customer's premises.
"Electricity product content label" means information presented in a uniform format by a retail supplier to its retail customers and disclosing the information required in RCW 19.29A.060 about the characteristics of an electricity product.
"Emerging large energy use facility" means a facility that has a maximum aggregate contract demand of 20 megawatts or more and is primarily engaged in providing a service described under code 518210 of the 2022 North American industry classification system.
"Emerging large energy use facility tariff or contract" means the terms set by an electric utility for providing electricity service to an emerging large energy use facility electric customer, and includes electric rates to be charged to the customer for electricity service.
"Facility" means any physical property, plant, building, structure, source, or stationary equipment located on one or more contiguous or adjacent properties in actual physical contact or separated solely by a public roadway or other public right-of-way and under common ownership or common control.
"Fuel attribute" means the characteristic of electricity determined by the fuel used in the generation of that electricity. For a renewable resource, the fuel attribute is included in its nonpower attributes.
"Fuel mix" means the sources of electricity sold to retail electric customers, expressed in terms of percentage contribution by resource category. The total fuel mix included in each disclosure shall total one hundred percent.
"Governing body" means the council of a city or town, the commissioners of an irrigation district, municipal electric utility, or public utility district, or the board of directors of an electric cooperative or mutual association that has the authority to set and approve rates.
"Investor-owned utility" means a company owned by investors that meets the definition of RCW 80.04.010 and is engaged in distributing electricity to one or more retail electric customers in the state.
"Marginal load" means at least two percent of an emerging large energy use facility's maximum contract demand amount.
"Nonpower attributes" has the same meaning as defined in RCW 19.285.030.
"Private customer information" includes a retail electric customer's name, address, telephone number, and other personally identifying information.
"Proprietary customer information" means: (a) Information that relates to the source, technical configuration, destination, and amount of electricity used by a retail electric customer, a retail electric customer's payment history, and household data that is made available by the customer solely by virtue of the utility-customer relationship; and (b) information contained in a retail electric customer's bill.
"Renewable energy certificate" means a tradable certificate of proof of one megawatt-hour of electricity from a renewable resource. The certificate includes all of the nonpower attributes associated with that one megawatt-hour of electricity, and the certificate is verified by a renewable energy certificate tracking system specified by the department.
"Renewable resource" has the same meaning as defined in RCW 19.285.030.
"Resale" means the purchase and subsequent sale of electricity for profit, but does not include the purchase and the subsequent sale of electricity at the same rate at which the electricity was purchased.
"Retail electric customer" means a person or entity that purchases electricity for ultimate consumption and not for resale.
"Retail supplier" means an electric utility that offers an electricity product for sale to retail electric customers in the state.
"Small utility" means any consumer-owned utility with twenty-five thousand or fewer electric meters in service, or that has an average of seven or fewer customers per mile of distribution line.
"Source and disposition report" means the report required in RCW 19.29A.140.
"State" means the state of Washington.
"Unspecified source" means an electricity source for which the fuel attribute is unknown or has been separated from the energy.
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By October 1, 2026, each investor-owned utility with an emerging large energy use facility in its service territory must submit to the commission and make publicly available an emerging large energy use facility tariff or contract for large energy use facilities in the utility's service area.
Within 10 months of submission by an investor-owned utility, the commission, under the authority granted by RCW 80.04.130(1), must review an emerging large energy use facility tariff or contract and approve, disapprove, or approve with modifications the tariff or contract. The commission may approve a large load energy facility tariff or contract only if it meets the standards outlined in subsection (4) of this section.
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By October 1, 2026, each consumer-owned utility with an emerging large energy use facility in its service territory must submit an emerging large energy use facility tariff or contract to its governing board for review and approval.
Within 10 months of submission, the governing body of a consumer-owned utility must approve an emerging large energy use facility tariff or contract that meets the standards outlined in subsection (4) of this section.
A consumer-owned utility's tariff or contract must limit the offer of electricity service to an emerging large energy use facility if offering such service would adversely affect the reliability or affordability of electricity service to other ratepayers in the utility's service area.
An electric utility without an emerging large energy use facility in its service territory is not required to develop an emerging large energy use facility tariff or contract until the utility plans to serve a new emerging large energy use facility.
All electric utility emerging large energy use tariff or contract submissions must be designed to avoid immediate and long-term risks to electric customers including, but not limited to, shifts of costs from large energy use facilities to other electric customers, and stranded utility assets. Specifically, the tariffs or contracts must require emerging large energy use facilities to:
Provide at least 10-year contractual service commitments by the facility to the electric utility, which may include, but are not limited to:
Collateral requirements, such as, if the facility does not have a credit rating of at least A- from S&P Global Inc. and A3 from Moody's Corporation, in addition to cash and cash equivalents on an audited balance sheet prepared in accordance with generally accepted accounting principles greater than 10 times the collateral requirement, the facility must provide a guarantee or collateral at the time of signing a tariff or contract equal to 50 percent of the total minimum charges for the full term of the contract;
Annual charges of 85 percent of projected electricity demand whether or not the facility uses its full projected demand to pay for infrastructure upgrades needed to serve the facility;
Exit fees equal to five years of the facility's minimum bill requirement in the event of a permanent closure; and
Other provisions to hold the electric utility and other ratepayers harmless if the facility were to substantially change its operations;
Pay the electric utility for the full costs of serving the facility, including:
The direct costs for the utility to interconnect the facility to the utility's grid, which may include the costs for the utility to study what would be needed for interconnection; and
The costs of providing electricity service to the facility including, as applicable, energy generation, transmission, distribution, and capacity and ancillary electricity services;
Demonstrate to the electric utility that the facility has, or plans to have, adequate power supply, either through purchasing electricity from an entity that is not the utility or by generating its own electricity, if the utility does not have adequate power supply for the facility;
Curtail the use of electricity provided to the facility from the electric utility during an energy emergency event at the request of the electric utility;
Pay real-time wholesale electricity prices; and
Demonstrate that the facility's marginal load is served under a contract between the electric utility and the facility where:
The marginal load participates in a demand response or interruptible load program of the interconnected electric utility; or
The facility funds the costs, including proportional administrative costs and any applicable start-up costs, of providing peak demand reductions at least equal to the facility's marginal load, for a utility's demand response program that serves other retail electric customers.
Any contract between an electric utility and an emerging large energy use facility must conform to the requirements in subsection (4) of this section.
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An emerging large energy use facility that commences operation on or after August 1, 2027, must agree to the terms of an electric utility's approved emerging large energy use tariff or contract before receiving electricity service, if seeking service, or to maintain electricity service, if already receiving service from the electric utility.
An emerging large energy use facility that commenced operation prior to August 1, 2027, is subject to the terms of an approved emerging large energy use facility tariff or contract of its servicing electric utility by January 1, 2028.
An emerging large energy use facility operating under a tariff or contract with an electric utility prior to August 1, 2027, may continue operating under such a tariff or contract until January 1, 2028.
The commission and consumer-owned utility governing boards must consider applying similar tariff or contract terms to similar future emerging large loads.
The owner of each emerging large energy use facility in the state must:
Publish a sustainability report demonstrating how the emerging large energy use facility will address and balance energy, water, and computing performance to maximize energy efficiency, water efficiency, and overall sustainability. The report must include projected annual energy and water consumption for three years and the source of the energy and water. The report must also provide evidence that the facility has access to an adequate water supply for the intended use of the facility through an existing or third-party water system or through a state-issued water right, as applicable.
For proposed emerging large energy use facilities, the owner must publish such a report prior to, or at the same time as, filing an application for any state or local permit.
For emerging large energy use facilities in operation prior to enactment of this act, the owner must publish such a report by January 1, 2027.
For emerging large energy use facilities in operation, the owner must update the report and publish the update every three years.
The owner must make these reports publicly available electronically. Upon posting electronically, the owner must also submit a copy to the department, the department of ecology, and the local jurisdiction or jurisdictions it is proposing to locate in, or is located in.
Annually report the following information in one report to the department of ecology by March 31st each year for the previous year:
The facility's annual water consumption. The report must include daily water quantities, total and peak uses, and any effluents that are discharged outside the emerging large energy use facility. The report may provide context by comparing the facility's water use to other users.
The facility's server cooling technology and any associated use of regulated refrigerants as defined in RCW 70A.60.010 and regulated refrigerant substitutes. The report must include monthly and annual quantities used, and of any quantities disposed outside the facility, including the entity who receives the material.
The facility's annual energy consumption. The report must include the source of the energy, and annual and monthly energy use, including peak demands. The report may provide context by comparing the facility's energy use to other users.
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The commission and the department must jointly develop reporting standards for emerging large energy use facilities to improve resource forecasting. Reporting standards may include, but are not limited to, standards on data quality, documentation, commercial readiness criteria, and information about associated transmission needs. The commission and the department must develop the standards by December 31, 2026.
After December 31, 2026, each emerging large energy use facility that is interconnected with an electric utility must provide a report, consistent with the reporting standards, to its interconnected electric utility by July 1st of each year. Each emerging large energy use facility that is not interconnected with an electric utility must submit this report to the department.
Each electric utility must consolidate any emerging large energy use facility reports it receives and submit an aggregated report to the commission in the case of investor-owned utilities and to the department in the case of consumer-owned utilities by December 1st of each year.
The commission and the department must further collaborate to improve resource forecasting of emerging large energy use facility loads. Collaboration may include facilitating a work group of electric utilities to establish standardized commercial readiness criteria across electric utilities for emerging large energy use facilities to enter interconnection queues.
When requesting interconnection with an electric utility, each emerging large energy use facility must:
Disclose duplicative interconnection requests across balancing authorities to the electric utility; and
Provide a report, consistent with the reporting standards developed in subsection (1) of this section, to the electric utility.
The owner of an emerging large energy use facility that commences operation after July 1, 2026, or an expanded emerging large energy use facility must:
Beginning in 2031 and every year thereafter, certify to the department that for the prior year it used electricity from renewable resources or nonemitting electric generation as defined in RCW 19.405.020, where the electricity generation facility commenced operation on or after January 1, 2026, to serve the load of the emerging large energy use facility in an amount that meets or exceeds 80 percent of its annual energy and capacity requirements; and
Beginning in 2036 and every year thereafter, certify to the department by January 1st each year that for the prior year it used electricity from renewable resources or nonemitting electric generation as defined in RCW 19.405.020, to serve the load of the emerging large energy use facility in an amount that meets 100 percent of its annual energy and capacity requirements.
As part of demonstrating compliance with the requirements in subsection (1) of this section:
The emerging large energy use facility must acquire the electricity with the renewable energy credit as defined in RCW 19.405.020 in a single transaction through ownership or control of the generating facility or through a contract for purchase or exchange; and
The emerging large energy use facility must not use the associated electricity for any purpose other than supplying its new emerging large energy use facility.
Each emerging large energy use facility using a renewable energy credit under this chapter must document the following: (a) The renewable energy credit represents the output of a renewable resource; (b) the vintage of the renewable energy credit is the compliance year; and (c) that the emerging large energy use facility has retired the renewable energy credit to a retirement subaccount within the western renewable energy information system designated by the department.
The requirements in this section are in addition to any requirements the emerging large energy use facility may have as an affected market customer under chapter 19.405 RCW.
For the purposes of this section, "expanded emerging large energy use facility" means an emerging large energy use facility with an increase of 20,000 square feet or more dedicated for housing working servers or an increase of 20 megawatts or more in annual electricity consumption, where the increase occurred on or after July 1, 2026.
The legislature intends by this section to allow all consumer-owned electric utilities and investor-owned electric utilities subject to the requirements of chapter 19.405 RCW, the Washington clean energy transformation act, to be eligible for allowance allocation as provided in this section in order to mitigate the cost burden of the program on electricity customers, other than, starting for calendar year 2027, those customers that are emerging large energy use facilities as defined in section 2 of this act. For no-cost allowances distributed starting in calendar year 2026, the department may not provide allowance allocation to mitigate the cost burden of the program on electricity customers that are emerging large energy use facilities as defined in section 2 of this act. The department may adjust the definition of emerging large energy use facilities for these purposes by rule making informed by the reporting required in sections 4 and 5 of this act.
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By October 1, 2022, the department shall adopt rules, in consultation with the department of commerce and the utilities and transportation commission, establishing the methods and procedures for allocating allowances for consumer-owned and investor-owned electric utilities. The rules must take into account the cost burden of the program on electricity customers.
By October 1, 2022, the department shall adopt an allocation schedule by rule, in consultation with the department of commerce and the utilities and transportation commission, for the first compliance period for the provision of allowances at no cost to consumer-owned and investor-owned electric utilities. This allocation must be consistent with a forecast, that is approved by the appropriate governing board or the utilities and transportation commission, of each utility's supply and demand, and the cost burden resulting from the inclusion of the covered entities in the first compliance period.
By October 1, 2026, the department shall adopt an allocation schedule by rule, in consultation with the department of commerce and the utilities and transportation commission, for the provision of allowances for the second compliance period at no cost to consumer-owned and investor-owned electric utilities. This allocation must be consistent with a forecast, that is approved by the appropriate governing board or the utilities and transportation commission, of each utility's supply and demand, and the cost burden resulting from the inclusion of covered entities in the second compliance period.
By October 1, 2028, the department shall adopt an allocation schedule by rule, in consultation with the department of commerce and the utilities and transportation commission, for the provision of allowances at no cost to consumer-owned and investor-owned electric utilities for the compliance periods contained within calendar years 2031 through 2045 consistent with subsection (1) of this section. This allocation must be consistent with a forecast, that is approved by the appropriate governing board or the utilities and transportation commission, of each utility's supply and demand, and the cost burden resulting from the inclusion of the covered entities in the compliance periods. The rule developed under this subsection (2)(d) may prescribe an amount of allowances allocated at no cost that must be consigned to auction by consumer-owned and investor-owned electric utilities. However, utilities may use allowances for compliance equal to their covered emissions in any calendar year they were not subject to potential penalty under RCW 19.405.090. Under no circumstances may utilities receive any free allowances after 2045.
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During the first compliance period, allowances allocated at no cost to consumer-owned and investor-owned electric utilities may be consigned to auction for the benefit of ratepayers, deposited for compliance, or a combination of both. The rules adopted by the department under subsection (2) of this section must include provisions for directing revenues generated under this subsection to the applicable utilities.
By October 1, 2026, the department, in consultation with the department of commerce and the utilities and transportation commission, must adopt rules governing the amount of allowances allocated at no cost under subsection (2)(c) of this section that must be consigned to auction. For calendar year 2030, electric utilities may use allowances for compliance equal to their covered emissions if not subject to potential penalty under RCW 19.405.090.
The benefits of all allowances consigned to auction under this section must be used by consumer-owned and investor-owned electric utilities for the benefit of ratepayers, with the first priority the mitigation of any rate impacts to low-income customers. Starting for no-cost allowances provided for calendar year 2027, the benefits of allowances consigned to auction under this section may not be used by consumer-owned and investor-owned electric utilities for the primary benefit of emerging large energy use facilities.
If an entity is identified by the department as an emissions-intensive, trade-exposed industry under RCW 70A.65.110, unless allowances have been otherwise allocated for electricity-related emissions to the entity under RCW 70A.65.110 or to a consumer-owned utility under this section, the department shall allocate allowances at no cost to the electric utility or power marketing administration that is providing electricity to the entity in an amount equal to the forecasted emissions for electricity consumption for the entity for the compliance period.
The department shall allow for allowances to be transferred between a power marketing administration and electric utilities and used for direct compliance.
Rules establishing the allocation of allowances to consumer-owned utilities and investor-owned utilities must consider, in a manner consistent with subsection (1) of this section, the impact of electrification of buildings, transportation, and industry on the electricity sector.
Nothing in this section affects the requirements of chapter 19.405 RCW.
A consumer-owned utility that is party to a contract that meets the following conditions must be issued allowances under this section for emissions associated with imported electricity, in order to prevent impairment of the value of the contract to either party:
The contract does not address compliance costs imposed upon the consumer-owned utility by the program created in this chapter; and
The contract was in effect as of July 25, 2021, and expires no later than the end of the first compliance period.
By July 31st each year, starting in calendar year 2026, each utility must provide to the department a list of existing and forecast retail customers that are emerging large energy use facilities to enable the department to provide allowance allocation consistent with subsection (1) of this section. For each facility the utility must indicate the forecast maximum delivery of power to the facility for the following four years, forecast annual retail load in megawatt-hours for the following four years, customer name, and facility type. The department may update these reporting requirements by rule.
Beginning July 1, 2026, each emerging large energy use facility must pay a fee to the department of revenue. The emerging large energy use facility fee is due annually each July 1st.
The fee is $0.005 per kilowatt hour.
The fee is to be paid in the manner and form prescribed by the department of revenue.
The proceeds of this fee must be deposited into the emerging large energy use facility account created in section 9 of this act.
The emerging large energy use facility account is created in the state treasury. All receipts from emerging large energy use facilities as authorized in section 8 of this act must be deposited in the account. Moneys in the account may be spent only after appropriation. Sixty percent of the expenditures from the account must be used for energy assistance, weatherization, low-income home electrification, and related readiness upgrade purposes, which may include the following programs administered by the department of commerce: The low-income residential weatherization program as described in chapter 70A.35 RCW, the state home energy assistance program, and the low-income home rehabilitation grant program as described in chapter 43.330 RCW. It is the intent of the legislature for these funds to add to rather than supplant or reduce other state investments for these purposes. Forty percent of the expenditures from the account must be appropriated to the student achievement council to distribute to public institutions of higher education as defined in chapter 28B.10 RCW for the following higher education purposes: Career services, quantum computing education, and artificial intelligence education for educators.
For any behind the meter energy system project, owned by an emerging large energy use facility, the facility receiving power from the system must ensure that any work associated with such a project will be performed by a prime contractor and its subcontractors in a way that includes community workforce agreements or project labor agreements, and the payment of area standard prevailing wages and apprenticeship utilization requirements.
Community workforce agreements and project labor agreements are self-contained, stand-alone agreements, and that by virtue of having become bound to such an agreement or agreements, neither the prime contractor nor the subcontractors are obligated to sign any other local, area, or national agreement.
Nothing in this section supersedes RCW 19.28.091 or 19.28.261.
For the purposes of this section:
"Project labor agreement" and "community workforce agreement" means a prehire collective bargaining agreement with one or more labor organizations that establishes the terms and conditions of employment for a specific construction project and is an agreement described in 29 U.S.C. Sec. 158(f).
"Terms and conditions of employment for a specific construction project" means the project labor agreement or community workforce agreement is a single agreement covering all labor organizations representing the building and construction employees involved in the project and covering all contractors and subcontractors working on the project.