The Consumer Energy Alliance (CEA) warns that legislation introduced by U.S. Sen. Tom Cotton (R-AR) to accelerate off-grid energy development for data centers and manufacturers could shift costs to residential customers and create new reliability and public safety risks.
In a Feb. 17 letter sent to Cotton, CEA Chief Operating Officer Katie Hammons outlined the problems that the organization has with the Decentralized Access to Technology Alternatives (DATA) Act of 2026, S. 3585, which would exempt consumer-regulated electric utilities from federal regulation.
While expressing support for responsible large-load development, CEA cautioned that provisions in the bill establishing a federal framework for consumer regulated electric utilities (CREUs) could have unintended consequences.
“While CEA supports efforts to responsibly accommodate large-load development, we have serious concerns with provisions in S. 3585 … that establishes a federal framework for CREUs,” Hammons wrote. “As drafted, these provisions risk shifting significant costs and operational risks onto residential customers and small businesses while introducing new reliability and public safety challenges.”
Cotton sponsored S. 3585 on Jan. 7 to accelerate American energy innovation and enable manufacturers, data centers, and other energy-intensive industries to build customized, physically isolated electricity systems without impacting existing power grids.
“American dominance in artificial intelligence and other crucial emerging industries should not come at the expense of Arkansans paying higher energy costs,” he said when proposing the legislation. “My bill will ensure that America can continue to lead in these spaces by eliminating outdated regulations.”
If enacted, the bill specifically would exempt new, physically isolated off-grid electricity providers and certain CREUs from federal regulations not designed for on-site, self-contained power systems, according to a bill summary provided by Cotton’s staff.
Eligibility would be limited to systems fully isolated from the bulk power grid to preserve grid reliability and public safety, the summary says, noting that S. 3585 would accelerate energy innovation, boost U.S. competitiveness, and support economic growth through off grid power solutions.
On the other hand
According to CEA, strong guardrails are necessary to ensure private electric infrastructure serving large users does not undermine affordability, reliability, or safety for the broader public.
The group pointed to complex and localized issues such as system isolation, rights-of-way, cost responsibility, grid coordination, and emergency response — areas it said state public utility commissioners have decades of expertise managing.
“By contrast, the DATA Act adopts CREU language without comparable siting, isolation, or cost-responsibility requirements and removes these decisions from state regulators best positioned to manage them,” wrote Hammons. “Allowing large industrial consumers to exit traditional regulated service without firm safeguards undermine the principles that protect everyday consumers.
“It also creates operational risks by introducing parallel electric systems that can complicate outage restoration, emergency response, worker safety, and liability,” according to the letter.
CEA further warned that enabling certain customers to bypass state oversight could disrupt long-term grid planning and increase costs for remaining ratepayers.
“State public utility commissions exist to ensure that infrastructure development occurs in a manner that preserves reliability, protects public safety, and fairly allocates costs,” added Hammons. “A federal framework that enables select customers to bypass that oversight risks endangering grid planning and increasing long-term costs for remaining customers.”
The group urged Cotton’s office to reconsider the bill’s CREU provisions and ensure that any policy addressing large-load growth prevents cost shifting to residential and small business customers, requires large users to fully internalize infrastructure costs and risks, establishes clear siting, isolation, and safety standards, and provides legal certainty over rights-of-way.
“Innovation should not come at the expense of affordability, reliability, or public safety,” Hammons wrote. “We would welcome the opportunity to engage further with your office to explore solutions that responsibly support both economic growth and consumer protections.”