Washington, DC – U.S. Senator Tom Cotton (R-AR) introduced legislation Wednesday aimed at loosening federal restrictions on electrical power production, allowing energy-intensive industries like data centers and manufacturing to build their own isolated electricity systems without impacting traditional power grids or raising costs for everyday consumers.
The bill, titled the Data Act of 2026, amends the Federal Power Act to exempt “consumer-regulated electric utilities”—a new category for large energy users that bypass traditional utilities—from certain federal regulations. These exemptions apply only to systems that remain fully physically isolated from the bulk power grid. If any connection is made to the traditional grid, federal rules would immediately apply.
Officials in Cotton’s office emphasized that the measure addresses rising energy demands from artificial intelligence and other emerging technologies. Under current regulations, infrastructure built to serve high-energy industries can lead to higher electricity bills for residential and small business ratepayers, even if the upgrades primarily benefit those industries.
“American dominance in artificial intelligence and other crucial emerging industries should not come at the expense of Arkansans paying higher energy costs,” Sen. Cotton said in a statement. “My bill will ensure that America can continue to lead in these spaces by eliminating outdated regulations.”
Key provisions of the legislation include:
- Exempting new, physically isolated off-grid electricity providers from federal regulations not designed for on-site, self-contained systems.
- Enabling manufacturers, data centers, and other energy-intensive users to develop reliable, customized power solutions without affecting existing grids or ratepayers.
- Preserving grid reliability and public safety by restricting eligibility to fully isolated systems.
- Accelerating energy innovation and boosting U.S. competitiveness through off-grid solutions.
Supporters argue the bill will support economic growth, particularly in AI-driven sectors, while protecting consumers from unnecessary cost increases. No co-sponsors were mentioned in the initial announcement.
The introduction comes amid growing national discussions on grid reliability and the energy needs of data centers, which are projected to consume increasing amounts of electricity in the coming years.
For more details on the bill, visit cotton.senate.gov.
