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Same goes for the Midwest, according to Stanford air quality researcher Marshall Burke.

It’s not just you: Summers are getting smokier.
For the third year in a row, cities like Detroit, Minneapolis, Boston, and New York are experiencing dangerously polluted air for days at a time as smoke drifts into the U.S. from wildfires in Canada.
Smoke has traveled to these places in the past, Stanford University researcher Marshall Burke told me. But the data is clear that the haze is becoming more severe.
“The worst days are worse,” said Burke, “and you can see that in the averages, the last couple of years are much, much higher across the Midwest and the East Coast than we’ve observed in the past many decades.”
Burke is one of the leading scholars studying wildfire smoke, investigating everything from its effect on air quality, public health, and behavior, to preventative and adaptive public policy responses. In one of his most recent papers, which has not yet been peer reviewed, he and his co-authors analyzed the influence of smoke on air quality over the past two decades, using satellite imagery of smoke plumes to disentangle how much of the fine particulate matter, or PM2.5, measured by air monitoring stations came from fires versus more typical sources like cars and furnaces.
The study shows a sharp increase in the amount of smoke in the air around the U.S. in just the past few years. From 2020 to 2023, the average American breathed in concentrations of smoke-related PM2.5 that were between 2.6 and 6.7 times higher than the 2006 to 2019 average.
The paper also contains a stunning set of charts that show that wildfires are eroding decades of air quality gains — and the efficacy of air quality regulation in general — and that without these smoke events, PM2.5 levels would have been significantly lower.

I caught up with Burke to better understand what we know about this seemingly sudden escalation of smoke events, and what we can do to better protect ourselves from them moving forward. Our conversation has been lightly edited for clarity.
Given the smoke events we’ve seen in the last three years, can we say anything about the next three years?
I don’t think you want to make bets on any specific years. The long run trend, unfortunately, suggests that the last few years are going to be more representative than the sorts of years we got 10 to 15 to 20 years ago. And that is due to the underlying physical climate that’s warming and drying out fuels and making fire spread faster and fires much larger. Larger fires generate more smoke.
Has it all been driven by Canadian wildfires?
No. The East Coast and the Midwest will get exposure from fires as far as California, often in the Northern Rockies. But the recent very bad exposure — 2023 was by far the worst year in the Midwest and East Coast — that was nearly all from Canadian fires. This year, again, it’s nearly all from Canadian fires.
Why is that?
The reason we’ve seen a lot more Canadian fires is the same reason we’ve seen a lot more fires in the U.S. West — increasing fuel aridity. As temperatures warm, forests dry out. And so when you get lightning strikes, which tend to start most of the large fires in Canada, you get faster fire spread and much larger fires.
Interestingly, we’ve seen in Canada fewer total fires over time. Often I see people posting this on Twitter — Climate change is not a problem, we’re getting fewer fires in Canada — and that’s true. I think they’ve reduced other sources of ignitions. But you still get lightning ignitions.
Burned area has gone the other way — you’ve seen an increase in burned area. So, fewer fires, but much larger fires, and these larger fires are the ones that put out a lot more smoke, and the smoke gets pushed into population centers in Canada and into the U.S.
There were really large wildfires in California before 2023. Why weren’t places on the East Coast having smoky days as a result of those?
It’s the way the wind blows and how far it has to go. In the large 2020 and 2021 fire seasons we had in the U.S. West, some of that smoke certainly was making it to the East Coast, but given the prevailing wind patterns and the distance the smoke had to travel, the influence of those fires on air quality was not as big as the recent Canadian fires.
Are there other events that cause comparable air quality degradation to wildfires?
You can get really specific things — if a train crashes and lights on fire and a given town is exposed to really high levels of whatever pollutant for a few days. Sometimes you can get dust events that have broad scale exposure. But basically never do you reach the AQI levels that we see in wildfires. Wildfires are pretty unique in their ability to expose very large numbers of people to a very high level of pollutants for days, or unfortunately now, weeks, at a time. Nothing else compares in the U.S.
If you go to other parts of the world where you have large anthropogenic sources — Indian cities, Chinese cities — it can be quite different. There’s some exceptions. Salt Lake City and places where you get inversions and you get pollution trapped for many days, you can get pretty high levels of exposure, but typically nowhere close to what you get during these acute wildfire events.
When the AQI goes back down to levels that are more common in a city after a smoke event and people feel safer going outside, are you able to measure how much of the PM2.5 remaining in the air is from a wildfire? Does it matter?
We try to measure that directly — on any given day, how much of the PM that you’re experiencing is from wildfires versus from other sources. What you see is these events can turn on really quickly, and they can also turn off really quickly, either because the wind direction changes or because it rains — if it rains, you rain out a lot of these pollutants, and then you’re breathing mostly clean air right away.
We also try to measure, how does human health respond? One thing that science doesn’t give us a crisp answer to yet is, is one day of 100 micrograms better or worse than 10 days of 10 micrograms of exposure? We don’t actually really know. What we do see is people respond very differently to those two scenarios in ways that likely affect health outcomes. On really bad days, people tend to stay inside. In California, total emergency department visits go down instead of up, and that’s because people are not getting in their cars, they’re not getting in car accidents, they’re not spraining their ankle playing football or whatever because they’re staying at home.
On lower smoke days, we see emergency department visits go up. That’s probably because people are not changing their behavior. But, maybe surprisingly, we still don’t have a crisp answer if you’re thinking about asthma or mortality or other cardiovascular outcomes.
What are some of the other questions researchers are trying to answer as this becomes more of a national issue?
All sorts of things. The immediate health impacts that you think about — respiratory outcomes have been the one that’s been measured best in a lot of different settings. Cardiovascular outcomes, I would say the evidence is surprisingly more mixed on that. There’s a long-standing literature that shows cardiovascular mortality impacts of exposure to PM, but for wildfire PM, specifically, that evidence is less clear. Sorting that out and trying to understand whether there are differences is important.
Cognitive outcomes — does it increase your risk of dementia? Does student learning go down? Does it reduce cognitive performance at work? I think there’s emerging evidence that smoke is pretty important. Exposure to air pollution, more broadly, is important, but wildfire smoke, specifically, can impact these outcomes.
Birth outcomes is another one we and others have looked at. You see a pretty clear signature of wildfire smoke in birth outcomes — increases to the risk of pre-term birth, for instance. We used to just think about sensitive populations as elderly populations or people with pre-existing conditions. And basically what the research is showing is, no, actually, everyone is sensitive in some way. The list of people who are likely affected probably includes most, if not all of us.
What are the potential policy responses to this in places that haven’t had to deal with it in the past?
I think there’s three policy buckets. This is more true in the U.S. than Canada, but our fire problem is a combination of a warming climate and a century of fire suppression that has left abundant fuel in our landscapes, so number one is dealing with climate change as best we can, and two is doing something about the accumulated fuel loads. There’s a lot we can do there — prescribed burning is one approach that we and others are studying a lot; mechanical thinning, where you go out and actually remove the fuel. Understanding when and where to do that and what the benefits are is an ongoing scientific challenge, but I think most of the evidence would suggest we’re going to need a lot more of that than we’ve done, historically.
But even if we do a lot of that, we’re going to get more of these smoke events, unfortunately. And so we need to protect ourselves when these events happen. Indoor air filtration works really well, so we need to make sure people have access to filters of various types. The evidence would suggest that we see health impacts even at pretty low levels of exposure, and so if you have a portable filter — I drive my family crazy, I’m turning ours on all the time. You should basically just be running them all the time.
What about in terms of messaging? I’m thinking about city officials or state officials, when a smoke event is coming — and maybe this is still an active area of research — but what’s the current thinking on what message to send to people?
Yeah, I think it is an ongoing area, in terms of exactly how to do this and who to target with the information. The way we typically do this is to set these thresholds, right? So, above some threshold, you get a notice, and below, you don’t. That is understandable.
But what we see in the data is that there’s not some level below which you’re fine and above which you’re screwed. What we see is the more smoke you’re exposed to, the worse off you are, and so our goal should just be to reduce our exposure as best we can. How to message that effectively is not something we have a crisp social scientific answer to yet.
A lot of the advice has historically been that you should stay at home with your windows and doors closed. In California homes that is not very protective because California homes tend to be not very tight. In my view, just telling people to close their windows and doors is not sufficient for protecting health. They need some sort of active filtration — portable air filter, central air — to do that.
The other thing that’s happened in California, and I’ve seen this with my own kids — should we cancel school on really bad days? The assumption is that kids are better protected at home than they would be in the school environment, and that’s just not obviously true. It could be the case that for many kids, schools are better. We don’t know, because we do not have comprehensive measurement of indoor air quality, and this is a huge failing that we need to fix. Just as we measure it pretty comprehensively outside, we’ve got to do the same thing inside, and we just haven’t done this.
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Matthew Zeitlin talks with the New Jersey leader at Heatmap House at New York Climate Week.
Governor Mikie Sherrill is a former Navy pilot, federal prosecutor, and a member of the U.S. House of Representatives. She was elected New Jersey's governor in November 2025 in a campaign dominated by the state’s surging electricity prices.
For this episode of Shift Key, Governor Sherrill joined Heatmap correspondent Matthew Zeitlin for a live conversation at our Heatmap House event, part of New York Climate Week. She reflected on electricity inflation, power markets, and what a data center developer would need to do to build in New Jersey.
Shift Key is hosted by Robinson Meyer, the founding executive editor of Heatmap News.
Subscribe to “Shift Key” and find this episode on Apple Podcasts, Spotify, Amazon, YouTube, or wherever you get your podcasts.
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Here is an excerpt from their conversation:
Matthew Zeitlin: So obviously — we were talking about this backstage — New Jersey has this great history of innovation technological development. And right now you have a lot of advanced industries in New Jersey — a pharmaceutical industry, financial services you have a lot of research around the Princeton National Lab. When you’re trying to attract these kind of next generation industries, how do you kind of assure them that they can set up large energy-consuming facilities that anchor those industries?
Mikie Sherrill: It’s kind of interesting, twofold. I would say to a large extent, we don’t need to attract some of these innovators, we need to keep them. Innovation starts in New Jersey. We have a million different spinoffs. We were talking about, they’ll do fusion, and they’ve already got the magnets that are found few places in the world. I mean, they come and spun off from the National Lab at Princeton. We have companies like that all over the state. And we have states like New Mexico that are constantly saying, you know, here, come here. And people in New Jersey — and if you’re not from New Jersey, this may surprise you — but people in New Jersey love New Jersey, and we want to stay there. And we want our kids to go to the great schools there and we want to continue to grow businesses. So companies don’t want to leave New Jersey. We just have to make sure they have enough, you know, that there’s not some other incentive driving them away.
At the same time, when you say, how can I assure that people are going to have all the power they want? We are creating a structure so that people can make sure that they have clean power generation. That’s why something like a virtual power plant is so interesting. But it is not on the state to kind of assure you can do whatever the heck you want in power generation. It is up to the companies to work with us to say, okay, I want to invest in this. This is going to be a net good for the people of New Jersey. So for example, I’m going to build a virtual power plant. I’m going to have battery packs in everyone’s basement. I’m going to pay them to do that. And we’re going to generate new clean power for this entity. That is how they need to come to work.
And I would again say that that was what was so interesting at the table, because there are people who get that. In some of the most innovative power generating companies, in some of the most innovative technological companies, they get that. They know where this is all going. Some of the old school companies are still sort of coming to the table saying, what can you do for me? That’s not where we are right now. We need to understand what benefit can you bring to the people of New Jersey.
You can find a full transcript of the episode here.
Mentioned:
Matthew on Governor Sherrill’s electricity rate freeze
Previously on Shift Key: Energy Secretary Chris Wright on Trump’s Pro-Nuclear, Pro-Fossil Fuel Agenda
Previously on Shift Key: Al Gore on AI, ‘An Inconvenient Truth,’ and the Biggest Surprises of the Past 20 Yearst 20 Years
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This transcript has been automatically generated.
Subscribe to “Shift Key” and find this episode on Apple Podcasts, Spotify, Amazon, YouTube, or wherever you get your podcasts.
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Robinson Meyer:
Hello, it’s Friday, October 2, and this is a special New York Climate Week edition of Shift Key. Last week, Heatmap welcomed climate and energy leaders, experts, and influencers to Heatmap House, our all-day summit in New York City. Among those leaders was New Jersey Governor Mikie Sherrill. Governor Sherrill is a former Navy pilot, federal prosecutor, and member of the House of Representatives. She was elected New Jersey’s governor in November 2025. That campaign, and her election year last year, was dominated by the state’s surging electricity prices, and specifically by how the interaction between the AI data center boom and features of the local multi-state electricity market, PJM, had caused power bills to surge in the state by about $260 per household.
Robinson Meyer:
Governor Sherrill ran on and implemented a one-year rate freeze. She’s since passed other legislation meant to make it easier to build solar and batteries in the state. My colleague, Heatmap correspondent Matthew Zeitlin, has been covering those policies, and last week he sat down at Heatmap House to discuss them with Governor Sherrill, as well as to discuss the future of her climate and electricity agenda. Let’s go to that conversation now.
Robinson Meyer:
Matt and Governor Sherrill were recorded in front of a live audience at Heatmap House at 22 Vanderbilt in New York City on September 23rd. I’m Robinson Meyer, the founding executive editor of Heatmap News, and you are listening to Shift Key.
Matthew Zeitlin:
Mikie Sherrill, thanks. Thanks so much for coming across the Hudson this morning to join us. Let’s just start with, I think, the kind of electricity or energy policy issue most associated with you. Is there a rate freeze in New Jersey right now? And are your constituents, the rate payers, are they still angry about their electricity bills?
Mikie Sherrill:
That’s a great question. So, yes, there is a rate freeze. In fact, that was a commitment I made. And so I didn’t, I would say less than an hour into my administration, the middle of my inaugural address, I declared a state of emergency on utility costs, froze rates, and then at the same time signed executive orders to increase power generation across our state. We’ve been at it ever since. And the movements we’ve made will save New Jersey rate payers over a billion dollars a year as we are implementing all of these changes. And, but no, rate payers are not happy in New Jersey, nor should they be, because rates did go up double digits. So they saw a large increase. And, you know, in large part, there had been a lot of people asleep at the wheel on how we were going to move forward in advanced technologies and generate more power and drive down costs.
Matthew Zeitlin:
So as I understand it, a component of those executive orders was taking some of the funding that comes from the regional greenhouse gas market and putting that into rate relief. You know, there is stuff on any New Jersey ratepayers bill that funds things that are government programs, energy programs. Have you rethought kind of both the RGGI and the societal benefits charges to think about why are we adding stuff onto the bill instead of, you know, making it cheaper?
Mikie Sherrill:
So we actually have taken stuff off the bill. There was an incentive on our bill that had been in place for years to incentivize our utility companies to join PJM. Well, they joined PJM years ago and they weren’t going to leave. So we took that off the bill and we just did that to drive down costs. We did use a little bit of our Reggie friends because there had been some rate cases that had already been made in the previous administration that we had to address so that we could keep rates flat to meet our commitment. What we’ve really done, though, that I’m very excited about with some RGGI funds is to put $100 million incentives into solar and battery storage projects so that we can see more generation in these clean power technologies. And I think that’s something that we’re going to see. EDA has just been putting that at our economic development authorities. So we’re very excited about what’s coming.
Matthew Zeitlin:
Yeah. And then just kind of building off of that. Obviously, New Jersey has aggressive climate commitments. How do you talk to your how you’re going to meet those climate commitments when they’re, I think everyone would say they’re most concerned right now about kind of that number on the bottom of their bill.
Mikie Sherrill:
Certainly. Look, we have, you know, when I say we have an affordability crisis, it’s not just one thing. It’s a crisis because it’s everything. Housing prices are up in some cases by 60% in some towns in the last five years. We have utility costs up by double digits last year. They were set to go up double digits this year until I froze them. We have, you know, the federal government’s cutting health care. So we have 70,000 people that can’t afford to be in the affordable care market anymore. We have about 300,000 people who are being kicked off the Medicaid rolls that we have to deal with. So there is a crisis going on. So you cannot simply say to people, you know, sorry, your bills are just going to keep skyrocketing. That is not the answer, which is why we’ve acted so aggressively.
Mikie Sherrill:
I approved 18 solar and battery storage projects in the first six months because we knew the federal credits were going to run out if we did not get that done. So that’s why we had to take on permitting reform right away to make sure we were growing that. I lifted a 50-year nuclear moratorium.
Mikie Sherrill:
We have continued to look at new and innovative things. A lot of people are talking about virtual power plants to get more capacity and drive-down costs. We are implementing that. I would suggest, and we were talking a little bit about this before we went on, it was so interesting. I’m one of one of the very few people that actually ran in 2025. So we knew the landscape. We knew what Trump was ending. We knew what the future looked like. We knew what we could and couldn’t do and spaces that we’d have opportunity and where opportunity was shut off from us. So we we could hit the ground running. And we also took advantage of best in class people.
Mikie Sherrill:
We have, she’s sitting right there, Maddie, who’s worked in New Jersey Power and understands it very deeply. We have Elizabeth Knoll, who came out of the federal government, who worked for Granholm and now is working for New Jersey. We have amazing people who are developing these new and innovative things. And I think the reason that New Jersey has now become a market leader in how you advance clean energy in a really innovative way is because we’ve just set up this government. So everything’s starting from, okay, where are we and how do we get to a better place and taking on all those new innovations.
Matthew Zeitlin:
Yeah, I mean, we were talking backstage, you know, when I took this job three years ago, I had no idea I’d be writing so much about energy policy in the state of New Jersey, but from the campaign and then, you know, in your first year here, there’s been so much going on. Obviously, we need to talk about data centers, you know, not too long ago. New Jersey had a program, a tax, you know, abatement, a tax incentive to attract data centers to the state. Obviously, there’s been a lot of local backlash to them. There was an enforcement action, I think, this morning in Vineland, New Jersey. That tax incentive has, I believe, been reversed. From your perspective now, if a data center developer wants to set up in New Jersey, what do they need to do?
Mikie Sherrill:
Well, we’ve laid out exactly what they need to do. They need to bring their own energy. They need to invest in our grid. They need to report their water and power usage. They need to hire good talent so that they create jobs in the community. And they need to bring community benefits. We’ve also put them in their own rate class, so they are not harming other rate payers. And we mean business. And I think you can see that with the action we brought against the Vineland data center. So this is not a free ride for anyone. If they want to engage in building this out, it has to be a benefit to our communities in New Jersey.
Mikie Sherrill:
What was so interesting to me, I was telling you about different financing agencies and different power generators and what this was going to look like going forward. And it was so fascinating to me to see the difference between the old and new. Some people at the table are saying, oh, you know, people are saying don’t invest in New Jersey because labor cost of labor is high. And I said, that is so fascinating. You’re telling me that because I have heard from so many people about how they’re dying to invest in New Jersey and they want to know how. And I said, yeah, we’re a labor state. You’re going to have to pay for talent. But at the same time, we are laying out exactly how you invest in New Jersey to take a lot of the risk out of it. But you have to come to the table early. You can’t just come in and say, work out some deal in back rooms and come say, now I’m going to plop a data center here.
Mikie Sherrill:
I mean, there are places in New Jersey where you should not be building data centers. There are places in New Jersey where it might make sense, but the towns and communities are going to decide that. So you have to start engaging early with them to explain what you want to do and why you want to do it. And finally, I’ve said, and you’ve, I told a data center, I said, and you guys have been horrible at it. I’m just telling you, nobody knows what a data center is and you need to explain why it’s even important. Are you curing cancer? You know, what are you doing? Why is this a societal benefit. And then I’ll end by saying, look, it’s up to businesses. They make money, right? Scientists innovate. Government needs to protect people. And that’s where government has been asleep at the wheel. And that’s why I think you see so many people not trusting innovation right now or where it’s going, because government needs to protect people from these downside risks. And right now, I would say the federal government’s not going to do it, which is why as a state, we are engaging so aggressively.
Matthew Zeitlin:
So obviously we were talking about this backstage, New Jersey has this great history of innovation technological development, and right now you have a lot of advanced industries in New Jersey — a pharmaceutical industry, financial services you have a lot of research around the Princeton National Lab. When you’re trying to attract these kind of next generation industries how do you then kind of, on the other way, how do you kind of assure them that they can set up large energy consuming facilities that, you know, are that anchor those industries?
Mikie Sherrill:
It’s kind of interesting twofold. I would say to a large extent, we don’t need to attract some of these innovators. We need to keep them. Innovation starts in New Jersey. We have a million different spinoffs. We were talking about they’ll do fusion and they’ve already got the magnets that are found few places in the world. I mean, they come and spun off from the National Lab at Princeton. We have companies like that all over the state. And we have states like New Mexico that are constantly saying, you know, here, come here. And people in New Jersey, and if you’re not from New Jersey, this may surprise you, but people in New Jersey love New Jersey and we want to stay there. And we want our kids to go to the great schools there and we want to continue to grow businesses. So companies don’t want to leave New Jersey. We just have to make sure they have enough, you know, that there’s not some other incentive driving them away.
Mikie Sherrill:
At the same time, when you say, how can I assure that people are going to have all the power they want, we are creating a structure so that people can make sure that they have clean power generation. That’s why something like a virtual power plant is so interesting. But it is not on the state to kind of assure you can do whatever the heck you want in power generation. It is up to the companies to work with us to say, okay, I want to invest in this. This is going to be a net good for the people of New Jersey. So for example, I’m going to build a virtual power plant. I’m going to have battery packs in everyone’s basement. I’m going to pay them to do that. And we’re going to generate new clean power for this entity. That is how they need to come to work.
Mikie Sherrill:
And I would again say that that was what was so interesting at the table, because there are people who get that. In some of the most innovative power generating companies, in some of the most innovative technological companies, they get that. They know where this is all going. Some of the old school companies are still sort of coming to the table saying, what can you do for me? That’s not where we are right now. We need to understand what benefit can you bring to the people of New Jersey.
Matthew Zeitlin:
And you mentioned earlier that, you know, your gubernatorial race was in 2025. We obviously have the midterms coming up in November, and then we have, you know, another election in 2028. What, when Democratic candidates come to you and ask about how they should talk about energy and electricity policy, or if they’re not coming to you and you would like to say something to them, what are you telling them? How they, you know, obviously every state, every district’s different, but what are some … What are some things you learned in 2025 that could be applied elsewhere in the country?
Mikie Sherrill:
Sure. I just want to go back one second. I know we’re on such limited time. That’s why I’m speaking fast. I would say the reason I was saying what can you bring to New Jersey is because the business case has been made for innovation technologies, and they are raking in billions of dollars. And we just need to make sure that as we build out these systems, that it goes to a benefit to everyone, that we are not simply funneling billions, trillions of dollars into a few people in Silicon Valley. We want to make sure this is a net good. That’s what I said government does, is we protect communities from those downside risks and we invest and create opportunity there. That’s what we’re looking to do, is making sure everybody gains here.
Mikie Sherrill:
The thing I would tell people who are running is you have to be nimble, You have to be innovative and you have to be aggressive and you can’t, you have to take risks. The status quo is not working for anyone. The can has been kicked down the road on too many different issues. And if you were going to try to duck your head and say some mealy mouth thing like, you know, we’re going to do all of the above and, you know, and it’s, you know, everyone’s welcome and we like business. That’s not going to cut it. you have to be able, I mean, we charged through the campaign by understanding deeply what was going on in our state. And so we were joking. I would say, you know, a lot of people in the whole market couldn’t tell you what PJM is, right? Still, a lot of governors probably couldn’t really delineate it. We knew everything about everybody because when your utility bill goes up by double digits, the person you’re going to hire to be the no boss of your state better understand why. And exactly what they can do to fix that.
Mikie Sherrill:
And then I have to convince people, because the final thing I’d say is, I’d say since Reagan, this idea of like government’s always the problem, get them out of the way and everything goes well, has come to its logical conclusion, right? There are areas where we need government to function, and we need government to function well, not just to sort of regulate stuff to actually drive innovation, to drive success for people, to drive opportunity, and make sure the rising tide lifts all boats. That’s what has been missing in so many cases. And so I think if you want to run for us, if you want to hold the public trust, if you want to be a public servant, then you need to engage deeply and you need to be really good at your job. And that means telling people exactly what you can do to make their lives better.
Matthew Zeitlin:
I think that’s probably as good a note as any to end on. Mikie Sherrill, thank you so much.
Mikie Sherrill:
Well, thank you. I really appreciate it.
The bill would let states and utilities discriminate against data centers and crypto miners, requiring them to pay higher rates to cover the full cost of any system upgrades.
Call it the data center double tap.
A wonky set of provisions in the Senate’s bipartisan permitting deal would rewrite federal electricity law to allow states and utilities to discriminate against artificial intelligence data centers and crypto miners for the first time.
The proposal would force AI data centers to pay for any new transmission infrastructure required to serve them — while still paying full freight to use the rest of the power grid. It could even let states require the facilities to subsidize other customers’ power rates.
Senator Martin Heinrich, the ranking Democrat on the Senate energy committee, mentioned the provisions during a press event announcing the deal on Wednesday, but they have so far attracted less attention than the bill’s other measures.
If enacted, the bill will “mean that we actually require big load centers — whether that’s a factory or a data center — to not pass those costs on to the American consumer by statute, not suggestion,” he said.
The bill arguably goes further than that summary. It creates new carve-outs in federal law that disadvantage data centers and crypto miners specifically, allowing states to discriminate against them as compared to other large-scale customers. It also protects electricity customers from the future risk of data centers failing to pay their bills.
The proposal comes at an auspicious time. Utilities are already gearing up to spend tens of billions of dollars building new transmission lines and power infrastructure to meet energy demand from AI data centers. The law would seek to ensure that tech companies and data center developers bear the cost of those upgrades.
Since the data center boom got underway, just about everyone involved — tech companies, utilities, environmentalists, and even President Trump — has agreed on one thing: Normal Americans should not pay for data centers’ burden on the power system.
These expenses can be significant, especially for the transmission system. Because a single computing facility can guzzle gigawatts of energy at once, compressing a city’s worth of power demand into just a few acres, it often requires the construction of specialized new infrastructure, or it risks causing blackouts and brownouts for nearby customers.
In 2024, utility customers in the country’s largest power market paid $4.3 billion for transmission upgrades to supply data centers, according to a Union of Concerned Scientists report.
Trump enshrined guarantees against these payments in his Ratepayer Protection Pledge in March. That document vowed that data center companies must pay for all of the electricity used to run their facilities, any new power plants required to generate that electricity, and any “new power delivery infrastructure upgrades.”
There’s just one issue: Under federal law, the last part of that pledge is nearly impossible.
Since the early 1990s, federal law has prohibited utilities from charging customers for both the cost of using specific transmission infrastructure and the cost of using the rest of the power grid.
The origins of that ban go back to a 1992 case where a power plant in one utility’s service area wanted to sell electricity to a neighboring utility. The local utility wanted to charge it the “normal” cost of using its power grid, plus a special fee to cover the cost of crowding its own customers off the necessary transmission lines.
The Federal Energy Regulatory Commission ruled that was illegal. Instead, it said, utilities could make a customer pay for the “incremental” cost of using specific transmission lines, such as those built to service their facility. Or they could charge for the “embedded” costs of the existing power grid.
Utilities could not charge customers for both “incremental and embedded” costs, it said; instead, utilities had to choose the higher of the two. FERC formalized the policy in 1994.
Electricity law has changed significantly since then, and those FERC rules don’t apply to power plants, Ari Peskoe, the director of the Electricity Law Initiative at Harvard Law School, told me.
But the ban still applies to electricity customers — even very big ones, like data centers. Peskoe wrote a Utility Dive article in April credited with first identifying the clash between the FERC rules, the data center boom, and the White House’s pledge.
The rules have serious implications for energy affordability. In practice, virtually every utility today is charging data centers for the “embedded” cost of using the existing grid, Peskoe told me. That’s because utilities want to avoid fights with each data center about which transmission upgrade costs are “incremental” and which are “embedded.”
Instead, utilities are forcing all of their customers to pay for the cost of transmission upgrades to serve those data centers. That means data centers will likely drive up normal Americans’ electricity rates for the next decade or so, even if officials, lawmakers, and tech companies say they don’t want that to happen.
The Senate proposal would change this, instructing FERC to require utilities to charge data centers for the cost of any new grid upgrades required to serve them as well as the costs of the underlying grid. In other words, it would mandate data centers pay for embedded and incremental costs.
These types of customers “should incur the full cost of the transmission service they require,” the bill says. This change would apply narrowly to data centers, crypto mining operations, and any facilities doing AI training — essentially discriminating against data centers under federal law.
The bill would also write a new section into the Federal Power Act that would require data centers, crypto miners, and other computing facilities larger than 20 megawatts to cover the entire cost of their service. The bill says utilities can’t spread the cost of providing energy or building infrastructure for data centers to any other customer.
If data centers leave a contract early, they will still have to pay for the full cost of those grid upgrades. And before a utility can upgrade any of their infrastructure to serve a data center, it must get “financial assurances or contributions” from that facility to cover the costs of doing so.
The bill also allows states to go further than these provisions — they can discriminate against data centers, set special rates by which data centers subsidize other customers’ power rates, and auction off the right to connect to the power grid.
Since I’ve learned about these provisions, I’ve struggled with what to call them. They aren’t quite a new tax on data centers, because the government does not collect the revenue. But many of them have tax-like qualities: They impose significant new costs on future data centers that would then be used to pay for upgrades to the broader power grid, and they protect the power system from the downside risks of a data center bust. They also allow for cross-subsidy of the power system, where payments from data centers can reduce everyone else’s electricity rates.
The law would bring federal rules governing electricity somewhat closer to those that already exist for natural gas, though it goes much further than those rules, too. Since 1999, FERC has generally assumed new interstate natural gas pipelines should be entirely paid for in an “incremental” way, meaning that new shippers or customers are supposed to bear the costs of service expansion alone. Having customers pay for embedded and incremental pricing remains illegal under federal natural gas law.
When combined with other provisions in the bill — such as those that make building new interstate transmission lines much easier — the new policies could help spur a large-scale buildout of electricity infrastructure paid for by the data center boom.
But even setting that more ambitious potential aside, the law would cover existing holes in the laws protecting Americans from paying for the data center boom.“I think it’s an improvement on the status quo,” Peskoe told me. “I think it’s consistent with data centers paying their ‘fair share,’ and consistent with the text of the Ratepayer Protection Pledge.”
And it is also “consistent,” he added, “with how normal people might think about these issues.”