By Hodan Omaar and Mitalee Pasricha | April 6, 2026 For decades, data centers were the quiet, reliable enginesof the information economy, operating in the backgroundof global commerce and daily life. But with the rise ofartificial intelligence (AI), these facilities have been thrustinto the public and political spotlight. Concerns continueto grow about what this expansion means for energysystems, water resources, and local infrastructure. But theroot causes of these anxieties are poorly understood andfrequently misattributed. Too often, policy responsestarget the scale of AI deployment rather than its systemicimpact. This report examines five of the mostconsequential claims in that debate—electricity use, gridaccess, pricing, reliability, and water—and reaches aconsistent conclusion: the core challenge is not AIinfrastructure per se, but rather the frameworks used tomeasure, price, and manage its impact. Modernizingthose frameworks could protect households andcommunities, strengthen grid performance, and reduceenvironmental impacts, while allowing AI infrastructure toscale in ways that support U.S. competitiveness andinnovation. INTRODUCTION At the center of the debate shaping legislative proposals, regulatory action,and public opinion are five claims: 1.AI workloads use too much electricity. 2.AI workloads crowd out other uses of limited grid capacity. 3.AI workloads will raise household electricity bills. 4.AI workloads threaten grid reliability. 5.AI workloads strain local water resources. These assertions arise for different reasons. In some cases, critics correctlyidentify real physical stresses—sharper power spikes, more volatile thermalloads—but reach for blunt responses such as bans or caps rather thantechnical and operational solutions that could address those stressesdirectly. In others, critics point to a legitimate concerns, such as higherhousehold electricity bills, but misdiagnose the cause, blaming data centerdemand rather than the market design rules that govern how grid costs arerecovered and passed on. In still others, the criticism reflects generalizedopposition to large-scale AI deployment rather than a clearly defined,empirically grounded system risk. This report examines each claim in turn. First, regarding the concern that AI data centers use too much electricity,while AI workloads do increase power demand, data centers are not theprimary, secondary, or even tertiary driver of rising global electricitydemand. More importantly, electricity use on its own is not a policy problemunless it leads to a concrete failure, such as higher household costs,reduced grid reliability, or environmental harm. Treating consumption asthe problem risks targeting scale rather than impact. To ensure thatpolicymakers are evaluating energy use in a way that reflects realoutcomes rather than headline numbers, Congress should direct theNational Institute of Standards and Technology (NIST) and Department ofEnergy (DOE) to develop energy-per-unit-of-work metrics that measurepower use relative to productive output, and support internationalalignment around these standards. Second, regarding the concern that AI data centers crowd out other uses oflimited grid capacity, the claim that data centers are “hogging” the gridimplies that their demand is displacing more socially valuable uses ofelectricity and that these workloads are inherently less beneficial. That isnot a fair characterization. Data centers support a wide range of economicand public benefits, and widely cited figures on their share of new demandoften rely on interconnection queue data that overstates real capacityneeds due to speculative and duplicative filings. That is not to say thatthere is no pressure on the grid. Policymakers should focus on making iteasier for all projects, from clean energy and hospitals to housing and datacenters alike, to connect to the grid, rather than restricting one category ofdemand. Congress should require utilities to publicly report queuemanagement best practices that incorporate AI and automation, theFederal Energy Regulatory Commission (FERC) should tie grid operator cost recovery to measurable reductions in study timelines, and Congress shoulduse federal tax credits and loan programs to incentivize automatedinterconnection filings. Third, regarding the concern that AI data centers will raise householdelectricity bills, the claim that data center growth will inevitably increasehousehold bills misidentifies the source of the problem. If data centerdemand were inherently pushing up household electricity costs, similargrowth would produce similar price increases across regions. It does not. Insome regions, utilities pay generators a reservation fee based on forecastsof future demand, meaning projected AI load alone can trigger immediatecost increases for households—even before a single data center is built. Inothers, generators are paid only for electricity delivered, so similar growthdoes not produce the