Local Responses to the New JLARC Report on Data Centers
High energy demands, financial windfalls, and planning strategies to protect local rate payers are among the report findings local politicians, community leaders, and advocates discuss.
By Martin Davis
EDITOR-IN-CHIEF
The long-awaited reported on data centers in Virginia by the Joint Legislative Audit and Review Committee (JLARC) dropped this week, and while it delivered no findings that would be considered shocking, it did bring into perspective both the opportunities and challenges data centers present our region.
The report outlined 8 major takeaways, which are outlined at the bottom of this piece. (Click to read the summary presentation of the report, or read the entire report.)
The Advance reached out to several politicians, community leaders, and advocates in Fredericksburg, Spotsylvania, and Stafford to get their take on the report. The following represent responses received by press time.
Will Mackintosh
Fredericksburg City Council Member
Speaking with the Advance via phone, Mackintosh said that while he has not had an opportunity to fully absorb the report, he did note that the energy demands outlined by the JLARC report “give me pause.” These concerns, however, are not enough to dissuade him at this point in supporting bringing data centers to the city.
He continued that the energy demands “aren’t enough to dissuade me because we will need to address those energy concerns whether [data centers] come to the city or not, so if we reject data centers out of hand we’re still carrying the environmental burden without the upside of support for our schools, first responders, and other important city priorities.”
The report broke down energy demand created by data centers in the years ahead into three categories — unconstrained growth, half of unconstrained growth, and no new data center demand.
The report concludes that “Building enough infrastructure to meet unconstrained energy demand will be very difficult to achieve, with or without meeting the Virginia Clean Economy Act (VCEA) requirements.” It went on to say: “Building enough infrastructure to meet half of unconstrained energy demand would also be difficult.”
Charlie Payne
Land Use Counsel with Hirschler Law
Payne responded to the Advance’s request for thoughts on the report in an email. He wrote:
“I thought the JLARC study was objective and fair. The study clearly highlighted the significant economic development and tax revenue benefits to localities and the Commonwealth. The issues raised regarding proposed mitigation measures (setbacks, sound, reuse water, etc.) are already in play in the Fredericksburg region, which arguably will be the benefactor of this current data center market wave. The governor’s economic development incentive to retain AWS and other data center investment within the Commonwealth has led to the expansion of the data center investment footprint outside of Northern Virginia, which will ensure new economic development opportunities for this region. … close to 25 million square feet of data center space has already been approved in this region, with another 20 million in the works. The other positive conclusion about the study is the point about water and fact water use is “sustainable”, especially with the introduction of reclaimed water which will be the primary water-cooling system for the Fredericksburg Region. Data centers are the fourth rail of necessary infrastructure that we all depend on, as much as we do public water and power. The billions of dollars of capital investment that data centers are making in this region are a gamechanger and will provide financial support to our localities so they can make greater investments in new schools, public safety, infrastructure, and quality of life amenities like parks and trails, while at the same time providing some much needed tax relief to local residents. The Fredericksburg Region is well position to grow and prosper. I am very excited to see Virginia and this region lead the way.”
Eric Bonds
Fredericksburg
In a phone conversation with the Advance, Bonds noted that the words “climate change” do not appear in the document. He then shared an op-ed he wrote for the Virginia Mercury last week that expresses his worry that Virginians have a “special kind of denialism” regarding data centers and energy.
“[S]urvey research,” he wrote, “indicates that we in Virginia largely agree that climate change is happening. …. But we have our own special variety of denialism here in the commonwealth: a denial that there are limits to how much electricity we can produce for data centers without also shattering our commitment to shift away from fossil fuels.”
He goes to argue that we cannot meet the growing energy demands imposed by data centers, while we move to phase out fossil fuels. To read his full argument, visit the Virginia Mercury.
Curry Roberts
President of the Fredericksburg Regional Alliance at The University of Mary Washington
In a phone conversation with the Advance, Roberts drew attention to the issue of “stranded costs” raised in the JLARC report, and he credited the report authors for proposing reasonable recommendations to address them.
Stranded costs are explained in the JLARC report this way:
One of the main risks posed by the data center industry’s rapid growth is that utilities will build more energy infrastructure than is needed if forecast demand does not materialize as expected, or one or more large data centers close. Overbuilding could strand utilities with infrastructure costs that would have to be recouped from their broader customer base.
While recognizing that companies like Dominion already take steps to avoid stranded costs, the JLARC report makes several additional recommendations. For example, the General Assembly could direct utilities to “develop a plan for addressing the risk of generation and transmission infrastructure costs being stranded with existing customers and file that plan with the State Corporation Commission as part of its biennial rate review filing or as a separate filing.”
Like Payne, Roberts also noted that the data centers coming to the Fredericksburg region have learned from the mistakes of data centers to our north, with broad buffer zones and cooling systems that are not dependent on potable water.
Tim Baroody
City Manager, Fredericksburg
No real surprises. Dominion will have to raise rates to accomplish unprecedented demand. The City can work to offset those increases by lowering real estate taxes, if we attract data centers. If we do not attract data centers, Dominion rates still go up. …We know that data centers will continue to populate the region, and we know their rates are not jurisdictionally sensitive.
On energy demands, that is an important regional, Mid-Atlantic, and National issue. The City needs to work harder to offset its energy usage to live Council’s goals. See … recent R-Board Resolution unanimously passed last week. This effort is focused on solarizing portions of both the R-Board property and the City’s closed landfill on Cool Spring Road. Very exciting opportunities on solar!
Eight Overarching Takeaways from JLARC Report
To read the full JLARC report, click here.
To view the slideshow presentation, click here.
Data centers provide economic benefits and can generate substantial local tax revenues for localities
The industry is driving immense increase in energy demand, and building enough new generation and transmission infrastructure to address demand will be difficult
Data centers are currently paying full cost of service, but growing energy demand will likely increase costs for other customers and create additional financial risks for utilities
Backup generators emit pollutants, but their run-time is minimal and existing regulations largely curb adverse impacts
Data center water use is currently sustainable
Increasing number of data centers are being built close to residential areas and can negatively impact residents; some localities have taken steps to address this concern
There are three options for Virginia’s sales-tax exemption for data centers
Sales tax exemption could also be changed to address policy concerns related to energy efficiency, natural and historic resources, and local residential impacts
Updated 12/12/24 at 5:04 p.m. to add comments by Tim Baroody.
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