The POWER Act: How Illinois is Trying to Regulate AI Data Centers

Despite the ways artificial intelligence has manifested in what seems to be every corner of life, political science Professor Griffin Thompson can’t remember ever voting for the technology, or its corresponding data centers, to exist — especially in Chicago.

While a variety of critics have voiced humanitarian concerns with generative AI, environmentalists in particular have cited the high energy and water requirements of AI data centers as their main concern. When it comes to the evolving technology, state legislators are weighing in on the conversations.

At the Illinois statehouse, lawmakers are trying to pass legislation that would provide comprehensive environmental, water and energy regulation of the state’s hyperscale data centers.

The proposed legislation, the Protecting Our Water, Energy and Ratepayers Act, or the POWER Act, was introduced in early February by Illinois State Sen. Ram Villavalam with the support and recommendation of the Illinois Clean Jobs Coalition. It currently sits in committee.

“We have serious concerns about the water use of data centers and the energy use,” Illinois State Rep. Robyn Gabel, one of the POWER Act’s sponsors, said. “Some of these super, hyper data centers can use as much electricity as a whole city.”

Global Strategy Group, a consultancy, conducted a poll in March 2026 of 800 likely Illinois voters, which found 67% of Chicagoans supported the bill. Across Illinois as a whole, the support for the POWER Act is bipartisan.

Part of the growing body of individuals who support regulations includes Thompson, who previously worked in the U.S. Department of Energy and now teaches the politics of energy, climate change and technology at Loyola. He said he fears without proper oversight that would be guaranteed by the POWER Act, AI companies will prey upon marginalized communities who stand to bear the environmental consequences of data center’s extraction of energy and water resources.  

“Where are the people’s voices?” Thompson asked. “Where is there authentic democratic participation in determining: do we need [artificial intelligence]?”

The proposed piece of legislation falls on the heels of the Climate and Equitable Jobs Act (CEJA) passed in 2021 and the Clean and Reliable Grid Affordability Act (CRGA) passed in 2025, which have pushed Illinois in the direction of renewable energy with intentions to phase out fossil fuels over the next decades.

If implemented, the POWER Act would require hyperscale data centers to pay for their own energy, use renewable sources to power their systems, obtain water use permits from the Illinois Environmental Protection Agency and assess and mitigate negative community impacts, like unwanted noise and pollution.

Energy Regulations

Proponents of the act are calling the proposed strategy BYONCCE, pronounced “Beyoncé,” or the “bring your own new clean capacity and energy” supply plan, according to Prairie Rivers Network Climate Policy Director Andrew Rehn, who spoke on behalf of the Illinois Clean Jobs Coalition of which the network is a part.

This strategy would create a “large load tariff,” which would allocate the new costs of adding more load to the energy grid to a new rate class of data centers rather than pushing the costs on ordinary ratepayers, Rehn explained. This would socialize the costs that ensue from the construction and existence of data centers — things like utilities and infrastructure — among data centers rather than the general public, he said. 

Additionally, the legislation would ask data centers to generate their own energy to prevent energy scarcity during peak demand and to enable the capacity market to continue guaranteeing energy to all consumers, according to Rehn.

“By bringing their own energy, they kind of net zero themselves in terms of capacity market,” Rehn said. “Capacity market says we’ve got a gigawatt more of demand to meet, but the data centers brought a gigawatt of generation, and so it matches up.”

By using this strategy, Rehns said the generation of energy will increase with demand for it, preventing bills from going up.

A report from the Union of Concerned Scientists published Jan. 21 estimated that in Illinois, data centers will account for up to 72% of electricity demand growth by 2030, according to current trends. This would translate to increased electricity system costs in Illinois by $24 billion to $37 billion, about 15% to 24%, the union claims.

The Union of Concerned Scientists helped develop the proposed POWER Act through research-backed recommendations, according to Midwest Policy Director James Gignac.

Gignac said the most important aspect of BYONCCE is that data centers would pay for and secure new electricity being added to the power grid. 

“A policy of ‘bring your own new clean energy’ protects the state’s clean energy goals,” Gignac said. “Through our analysis, we showed that under current policies – even though Illinois does have strong existing energy policy – the impact of this amount of data center electricity demand will cause existing fossil plants, coal and gas plants to operate more and that means more pollution.”

Rehn said the legislation could also potentially provide incentives for data centers based on how much energy they generate from renewable sources.

Water Regulations

When Illinois Environmental Council Director of Communications Hannah Flath was growing up, her mother owned her own business. At the office, Flath’s mom had a closet holding the servers needed to power her office computers.

“The closet was like 10 degrees warmer than the room that closet was in because the servers were constantly running to even just power the five desks that were in my mom’s office,” Flath explained.

The same scene happens on a massive scale at AI data centers, meaning large amounts of water are required to cool computer servers and prevent overheating. This extensive water use is a cause for concern for POWER Act advocates, like the Alliance for the Great Lakes, who worry about pollution and overuse of the “finite resource.”

Because of Chicago’s proximity to Lake Michigan, the city has attracted a significant number of AI companies, now boasting over 200 data centers. With 22% of the world’s supply of freshwater, the Great Lakes have become a popular spot for data centers to access water resources, according to Alliance for the Great Lakes Regional Director of Government Affairs Andrea Densham.

“Our region has agriculture, mixed industry, data center and residential use, and so it’s all of those things that are pushing and pulling on what is a really finite thing, which is water resources,” Densham said.

The POWER Act would mandate quarterly water usage reporting and water resource and scarcity planning. It would also necessitate Water Impact Permits created and implemented by the Illinois Environmental Protection Agency, according to Villavalam.

Rehn said the POWER Act would also look to institute less wasteful cooling strategies by turning to closed loop rather than evaporative cooling technology. Closed loop cooling would seal the water to prevent pollutants from leaking into the environment and would use less water than the evaporative cooling method, which many data centers currently use.

Community Impact Concerns

Beyond the concerns for energy and water use, the act would mandate that AI companies assess any negative impacts data centers have on the community. Gabel said these negative impacts could include pollution from using diesel generators as backup generators or noise levels.

Another community impact concern is the lack of transparency between data centers and constituents, according to Flath from the Illinois Environmental Council.

“The community concern bucket is just quite vast, which is unfortunate because it means we have lots of problems to address,” Flath said.

Energy specialist Thompson said negative community impacts are the most worrisome part of allowing data centers to populate Chicago. The introduction of a technology of the magnitude of AI follows a “timeless pattern,” he said.

“The people with money extract resources from the community, enclose the public sphere for private use and exclude the public from conversations about the operations of their commodity,” Thompson said. “We saw it with railroads. We see what we saw with the Internet. We see it with every large technological system.”

This pattern of extraction and exclusion requires intervention, he said. While the existence of hundreds of unregulated data centers already in the state makes the POWER Act “tardy,” according to Thompson, he said it sends a signal to technology companies.

“I don’t want my electricity rates to go up just because Jeff Bezos needs a new data center,” Thompson said.

Rehn said the legislation also looks to ban non-disclosure agreements between local governments and data centers and instead require transparent community-benefit agreements between data centers and their impacted neighbors.

How are data centers involved?

Gabel said her office has spoken with the Data Center Coalition, an association which advocates for public policy that supports data centers, who she said want to be “good corporate citizens.”

Nonetheless, the coalition worries about Illinois’ “increasingly challenging regulatory environment” for data centers, according to a statement from Director of State Policy Brad Tietz.

“While there are aspects of the bill we look forward to discussing, the Clean Jobs Coalition’s proposal as a whole would create significant uncertainty and market friction,” Tietz wrote. “This would put the long-term viability of data center investment in the Illinois market at risk, at a time when Illinois has already become a declining data center market.”

The Data Center Coalition claims more than $100 billion worth of data center projects have bypassed Illinois in favor of neighboring states with less regulations, and they believe the POWER Act in its current form will further prevent new projects in the state.  

The coalition reports that data centers in Illinois support 115,000 jobs and generate $1.8 billion in tax revenue, which Tietz said makes living in the state more affordable.

Timeline

Flath said members of the Illinois Clean Job Coalition are pushing to get the POWER Act passed this spring depending on the speed of hearings and negotiations over the next several weeks. Because of the size of the legislation, she said the process may move slower.

If the POWER Act doesn’t pass before the summer, Flath said the advocates will keep working over the summer for it to be passed in veto session in the fall of 2026.

“We think that the fact that we are seeing so many of these proposals pop up across the state and know even more are coming, makes it all the more urgent for lawmakers to start legitimately acting on this, which will require sitting down and having hard conversations and hopefully comprising and reaching an end result that ideally protects Illinois and our resources,” Flath said.