More than 100 local communities around the country have enacted moratoriums on data centers. Washington state and 12 other states are pushing forward with their own statewide moratorium proposals.
Washington state lawmakers moved forward this legislative session with Engrossed Second Substitute House Bill 2515 (E2SHB 2515). It was approved by the house and sent to the Senate Committee on Environment, Energy & Technology with amendments in a 7–2 vote. With a longer session next year, the measure has more time to advance to address the rapid expansion of energy-intensive data centers across the state.
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.
Why Lawmakers Are Acting
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 energy load growth, with implications for energy affordability, reliability, water use, and natural resources.
While acknowledging the economic benefits data centers have brought — including construction jobs and tax revenue, particularly in rural communities — legislators also highlight the intensive use of electricity, water, and refrigerants required to operate data centers.
E2SHB 2515 outlines four core policy priorities:
- Protecting energy affordability for other consumers
- Safeguarding grid reliability
- Increasing transparency around resource use
- Requiring a transition to 100% clean electricity over time
Utility Tariffs and Cost Containment
A central component of E2SHB 2515 requires utilities serving these facilities to develop dedicated tariffs or policies. 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:
- Minimum 10-year contracts
- Collateral and exit fee provisions
- Charges designed to recover full infrastructure and compliance costs
The intent is to ensure that large new loads do not impose uncompensated financial risk on residential or small commercial ratepayers.
Clean Energy Requirements
Beginning in 2031, qualifying facilities must certify that at least 80% of their annual energy and capacity requirements. 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.
Reporting and Transparency
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.
Changes to Climate Program Allowances
The bill also modifies the allocation of no-cost carbon allowances under Washington’s Climate Commitment Act. 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.
Tax Incentives With Conditions
The legislation creates a limited sales use tax exemption for eligible data centers located east of the Cascades that border another state and meet size thresholds.
However, the exemption includes:
- Job creation requirements tied to family-wage positions, in other words jobs providing wage and benefits to sustain a family
- Green building certification mandates
- Prevailing wage and project labor agreement requirements
What This Means for Utilities and Developers
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.
House Bill 2515 passed the house, but failed to Pass the Senate before session ended in 2026. Look for it to be re-introduced in 2027, when it will need support to succeed.
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