This is the third post in our four-part “BAAJA Blast” series covering the proposed Bipartisan American Affordability and Jobs Act of 2026, released on September 30, 2026. Check out our earlier posts on the bill’s provisions on transmission and offshore wind.

The Bipartisan American Affordability and Jobs Act of 2026 (BAAJA) contains three provisions that, if adopted, would meaningfully shape data center development in the United States. Section 2107 would introduce binding protections for ratepayers. Section 2108 would create new market access for behind-the-meter energy resources, including batteries and other storage. And Section 2114 would require new reporting on data center load.

Whether a data center gets built remains, first, a question of community support and, second, a state and local question of zoning, siting, and permits. But BAAJA would significantly shape how that data center is powered and who bears the cost. As discussed in our earlier series on sustainable data center growth, the projects most likely to succeed pair speed with responsible energy, water, and community practices. The bill's framework tends to reward that approach.

What Makes a Data Center Under BAAJA
BAAJA uses more than one definition of a data center. The Federal Energy Regulatory Commission (FERC) transmission pricing provisions in Section 2107(a) apply to a “computational load site.” That term covers one or more buildings or installations at a single location that primarily contain IT infrastructure for software applications and services, artificial intelligence training and deployment, cryptocurrency mining, or other data center computing. The site must also connect to the bulk-power system. That definition has no size threshold.

The ratepayer protections in Section 2107(b), by contrast, apply only to a “covered load,” meaning electricity demand from one or more data centers or “high-density computing facilities” that reaches 20 megawatts or more. A load can meet the threshold at a single site or across multiple sites under common ownership or control. Phased projects count if they can reasonably be expected to reach 20 MW at full buildout. Qualifying facilities include those used for AI training or inference, cloud computing and data hosting, and cryptocurrency or other digital-asset computation. The definition excludes computing equipment that is merely ancillary to a facility with another primary commercial or industrial purpose.

Section 2114 uses a similar definition for its data reporting requirement. It defines a “data center entity” as an end-user, or group of co-located end-users, whose primary purpose is to house computing, networking, or data storage equipment used to process, store, or transmit digital data. The covered uses and the exclusion for merely ancillary equipment mirror the covered-load definition.

A given project could fall within one definition but not another, so a project-by-project analysis will matter.

Section 2107: Ratepayer Protection
The core principle running through Section 2107 is “cost causation,” the idea that the customer whose demand creates a cost should be the one who pays it. The section applies that principle to large computing loads at both the federal and state levels.

Section 2107(a): FERC Transmission Pricing
Within 270 days of BAAJA's enactment, FERC would have to revise its 1994 transmission pricing policy statement. Under the revised policy, utilities would charge costs for transmission service to data centers, whether the data center buys that service directly or through a utility or other entity acting on its behalf. 

The provision also contains formal findings by Congress. In them, Congress finds that transmission rates are not “just and reasonable” if they charge computational loads less than both embedded costs and incremental expansion costs. “Just and reasonable” is the legal standard FERC applies to rates. Embedded costs reflect a customer’s fair share of the existing grid. Utilities already recover the cost of the lines, towers, and substations they have built through the standard rates all customers pay, and a new data center that plugs into that system would have to pay its share too. Incremental expansion costs, by contrast, cover new equipment that would not exist but for the data center, such as a new substation or an upgraded line built specifically to serve it.

Further, the bill guards against double-charging. Each year, a utility collects a set total amount to pay for its transmission system and spreads it across customers’ rates. Under the bill, payments for a data center’s own new equipment would count against that total, lowering the amount the utility collects from everyone else.

The revised FERC policy would also have to offer a lower rate for loads that elect non-firm, interruptible transmission service. FERC would be required to propose a rule within 270 days after publishing the revised policy statement and finalize it within one year after that, meaning that the final rule could be issued as late as roughly two and a half years after BAAJA’s enactment.

Section 2107(b): The Ratepayer Protection Floor (New FPA Section 228)
Section 2107(b) would add a new Section 228 to the Federal Power Act focused on data centers and high-density computing facilities that meet the 20 MW covered-load threshold. The Federal Power Act is the primary federal law governing the interstate transmission of electricity and wholesale power sales. It is also the source of FERC’s authority over those markets.

For covered loads, the bill sets a “ratepayer protection floor.” It starts with a utility’s “incremental cost” of serving a covered load: everything the utility must spend only because that data center connected. Unlike the FERC transmission provisions in Section 2107(a), this definition covers the full cost of supplying the data center, including new generation, storage, transmission, and local distribution. The bill would bar utilities from passing any of that incremental cost on to other customers. That is the “floor” because a data center’s payments could not fall below what it costs to serve it. The floor is a minimum, not a cap. Regulators could charge a data center more than its incremental cost and return the excess to other customers as a rebate or a rate reduction. 

Cost recovery would also continue if a data center terminates its contract or stops buying power early, so stranded costs would not land on everyone else. Before building or upgrading facilities to serve a covered load, utilities would have to require financial assurances or contributions sufficient to cover the cost. They would also have to credit any amounts the load already posted for the same upgrade.

Section 2107(b): New Tools for the States
If BAAJA is enacted, the new Section 228 would also preserve state authority over retail service to covered loads. States could set rates for covered loads above both average and incremental cost and apply the excess to reduce other customers’ rates. The bill would also give states the option to allocate the opportunity to obtain service through an “open season” or competitive solicitation. Awards would go to the projects offering the greatest benefit to other ratepayers, rather than on a first-come, first-served basis. States could also require a data center to procure or build new generation sufficient to meet its demand. Or they could require it to accept a transmission service that limits how much energy it can withdraw from the grid, or when.

A subsection of proposed Section 228 titled “Protection of American Industry” would let states treat covered loads as a separate customer class. That class could face less favorable rates, terms, and interconnection or service priorities than other large industrial, manufacturing, or commercial customers. The ratepayer protection floor and the state rate-setting and open-season tools described above would apply only to loads that interconnect on or after enactment, and arrangements that FERC or a state approved before enactment would remain in effect. The bill does not expressly extend that forward-looking limit to the “Protection of American Industry” subsection, however. Read literally, states could apply less favorable treatment to existing data centers as well, an issue owners of operating facilities should watch closely as the bill moves forward.

At first glance, less favorable treatment may sound like bad news for developers. But it could also clear a path forward. Concerns that data centers drive up household electricity bills have helped to fuel local opposition and proposed moratoria in many jurisdictions. A separate customer class gives state regulators a transparent, durable way to show that data centers are paying their own way. That can make it easier for communities, existing customers and regulators to understand that they would not be subsidizing new projects. 

Projects that bring their own clean generation and storage, commit to flexible operations, and engage early with host communities will be best positioned to benefit, both in open seasons that weigh benefits to other ratepayers and in the local approval processes that have stalled projects elsewhere.

Section 2108: Market Access for Behind-the-Meter Resources
The bill pairs Section 2107’s cost-allocation rules with new options for flexible supply. Section 2108 would open wholesale energy, capacity, and ancillary services markets to aggregations of “qualifying behind-the-meter distributed energy system” facilities. These include batteries, fuel cells, and generators on the customer’s side of the meter that can come online within 15 minutes and that the grid operator can dispatch on signal. Individual facilities would have to be at least 5 kilowatts and aggregations at least 100 kilowatts. 

The market-access requirement would take effect 18 months after enactment and would apply to markets run by Regional Transmission Organizations (RTOs) and Independent System Operators (ISOs). Data centers in regions without an RTO or ISO, including much of the Southeast and West, would not see the same benefit. 

For data centers, Section 2108 could change the economics of on-site clean energy. Under Section 2108, a data center could join an aggregation and sell energy and grid services from battery system into wholesale markets. That new revenue stream could make on-site storage more attractive. It could also help data centers meet the state conditions described above, such as a requirement to bring their own generation or to accept limits on how much power they draw from the grid. Data centers can strengthen these benefits by pairing storage with on-site renewables. 

Grid access matters here as well. When new grid connections take years, some developers turn to on-site fossil generation simply to get power sooner, with lasting emissions consequences. Faster interconnection, which we discussed in our earlier post on transmission, combined with Section 2108’s new market access, would incentivize cleaner, grid-connected options at data centers.

Section 2114: Data Center Load Reporting
Section 2114 directs the Energy Information Administration (EIA) to revise Form 861 to include load from “data center entities.” EIA is the independent statistical and analytical agency within the U.S. Department of Energy. Form 861 is EIA’s annual survey of electric utilities and other electricity providers. It collects data such as retail sales, revenue, and customer counts. 

The deadline for the revision is no later than 90 days before the first April 1 after enactment. The bill places the obligation on EIA to revise the form, which electricity providers complete. It does not, on its face, impose a new reporting requirement directly on data center owners or operators. Still, the change should give policymakers and the market a clearer picture of how much load data centers are adding to the grid.

Points to Watch

• The ratepayer protection floor, the new state rate-setting tool, and open-season tool would apply only to covered loads that interconnect on or after enactment. The provision allowing states to treat covered loads as a separate, less favorable customer class is not expressly subject to that limit. How states read that gap could determine whether operating facilities face new rates, terms, or service priorities.
• States could award service to covered loads through open seasons or competitive solicitations that favor the projects returning the greatest benefit to other ratepayers on a present value basis, regardless of when requests for service were received. If states use this tool widely, an early place in line could matter less than the strength of a project’s ratepayer value proposition, including on-site generation, storage, and flexible operations.
• The 20 MW covered-load threshold can be met across multiple sites under common ownership or control, and phased projects count if they are reasonably expected to reach 20 MW at full buildout. Developers planning smaller or staged facilities should not assume they fall outside the ratepayer protections.
• FERC’s final transmission pricing rule could arrive roughly two and a half years after enactment. The behind-the-meter market-access requirement would take effect after 18 months and only in RTO and ISO markets. 

Looking Ahead
BAAJA would create binding federal rules for data center cost allocation backed by expanded state tools. For developers and buyers, that means higher and more predictable cost exposure, more financial assurance requirements, and a greater premium on flexibility and on-site supply. For utilities and commissions, it offers a framework for protecting other customers while still serving new demand. The bill itself does not address sustainability or community engagement directly. But its approach is compatible with a sustainability-focused version of data center policy. Data center development paired with sustainability and genuine community engagement is the growth most likely to move forward.

Stay tuned for the final installment of our BAAJA Blast series. And for more on Foley Hoag’s analysis of the data center industry, check out our white paper series here.