Lisa Karstetter grew up in Eastern Washington’s agricultural country. By the mid-2000s, she was running the Quincy Valley Chamber of Commerce when she started getting calls from tech companies eager to build facilities packed with online computers.
“They would call them ‘server farms,’” Karstetter said. “And I’m like, yeah, that’s not a farm.”
In 2006, in Karstetter’s rural hometown of Quincy, Microsoft broke ground on what’s now called a data center, planting the seeds for a hub of the facilities.
Today, tech companies are racing faster than ever to erect massive data centers nationwide as elected leaders and communities scramble to keep up with the developments and their impacts.
After decades of welcoming the tech facilities with tax exemptions and open arms, Washington is looking to mandate power and water prenuptials before entering into new partnerships. Lawmakers are pursuing legislation that requires data centers to share information about their resource use and projections for future consumption. The House passed the measure Saturday with 51 yes votes and 41 against. It now moves to the Senate.
“The game has changed here,” said Zach Baker, regional and state policy director of the nonprofit NW Energy Coalition. In the Pacific Northwest, “data center growth is the most rapidly growing part of our electricity load,” he added, with the potential to add the equivalent of two to four Seattle’s worth of power demand by 2030.
On one side are benefits including job creation, poverty reduction and a surge in property taxes that support local communities — leaving many rural areas eager to host the facilities. Others worry about energy shortages, rising residential utility bills and strained water supplies.
Meanwhile, the region’s tech giants are spending billions on data center expansion to support their AI-related initiatives. In response to growing concerns, Microsoft is pledging to cover its electrical costs and Amazon is promoting a study showing it’s paying its way.
‘Concerned about the impact’
Data centers are packed with computers and processing chips that function as the essential infrastructure of the internet, serving up digital content and facilitating online applications that underpin modern life. The electronics consume energy and generate heat, and they require additional energy and large volumes of water to keep them sufficiently cool.
Washington is home to approximately 126 data centers and related facilities with a footprint of nearly 7 million square feet, or about 122 football fields. Microsoft is the biggest data center owner in the state with 30 of the sites, while Sabey Data Centers has eight of the facilities, according to the research firm Baxtel.
The Washington facilities currently have a peak energy demand of 1,414 megawatts, Baxtel reports. If the data centers were to run at that full capacity for a year, they would consume slightly more power than all of the utility customers served by Seattle City Light.
Amazon has most of its Pacific Northwest data centers in Oregon with 47 sites, by Baxtel’s assessment. Meta has 10 data centers in the Oregon and Google owns multiple campuses there.
The use of artificial intelligence tools has super charged demand for data centers globally.
Microsoft spent $37.5 billion on capital expenditures in last three months of 2025 alone, an increase of 66% from a year ago. Amazon said it will spend $200 billion this year on capital expenditures worldwide, predominately for its Amazon Web Services cloud business.
Some of that expansion is targeted for Washington, stoking concerns that didn’t exist decades ago when the state had abundant supplies of clean, cheap electricity. Data centers are expected to drive roughly half of the energy growth demand in the U.S. by 2030, according to new data from the International Energy Agency, with natural gas and solar providing much of the supply.
“With such a rapid increase in demands on the grid, I’m super concerned about the impact that might have on rate payers and also grid reliability,” said Rep. Beth Doglio, D-Olympia, lead sponsor of legislation addressing the data centers. “Beyond that, there’s a lot of concern for my constituents around water use.”
Proposed data center rules
House Bill 2515 establishes new regulations for data centers that use 20 megawatts of power or more. The bill includes:
- Requiring utilities to set a tariff or policy with data centers to prevent any financial risk to other utility ratepayers, ensuring the facilities cover all associated costs with deploying and generating energy.
- Companies must submit annual sustainability reports on energy, water and refrigerant use, as well as pollution emissions, plus projections on future resource demands.
- Preventing data center operations from receiving free credits for their carbon emissions, as required to meet the state’s Climate Commitment Act, beginning in 2028.
Six Democrats voted against the bill late in the afternoon Saturday, while no Republicans voted for it. Six representatives were excused.
At public hearings on HB 2515, organizations representing sustainability interests and low-income ratepayers spoke in favor of the measure as offering important protections, while those in opposition included leaders from Eastern Washington cities, labor organizations, and business and data center representatives.
The Seattle Metropolitan Chamber of Commerce and the Washington State Building & Construction Trades Council oppose the legislation.
“HB 2515 is well-intentioned, but it does not address the real challenge Washington faces,” leaders of the organizations said in a recent op-ed. “The solution is not to slow or penalize critical infrastructure. The solution is to build clean energy faster, modernize the grid, and hold all participants to high standards.”
Testimony in support of the measure came from Logan Bahr, community and government relations manager for Tacoma Public Utilities.
“This is a reasonable response to emerging large loads to ensure that consumers are protected from cost shifts,” he said, and creates “clearer expectations and greater transparency for integrating data centers into our grid.”
Neither Amazon nor Microsoft have taken positions on the legislation. Dan Diorio, vice president of state policy for the Data Center Coalition, spoke against the bill, saying Washington was singling out his industry while other states are addressing energy demand across sectors.
Separate measures, HB 2708 and SB 6231, would retain a sales tax exemption applied to the purchase of data center equipment for new facilities, but eliminate the tax break for replacement hardware at existing sites. Gov. Bob Ferguson’s supplemental budget proposal also nixes the tax break, which could add approximately $63 million to the state’s budget starting next year.
Tech industry responds
In response to the rapid rollout of new data centers nationally, communities from Arizona’s Sonoran Desert to Saline Township, Michigan, have organized to fight data center expansion through moratoriums and protests. Multiple states are considering rules to slow or pause new developments.
In addition to Washington state officials, President Trump, congressional leaders and other state lawmakers have taken action to protect ratepayers. Oregon last year approved the POWER Act, which requires large data centers to enter into contracts with utilities to ensure their electricity costs aren’t passed on to others.
Microsoft is trying to address the pushback, last month launching a community-focused initiative pledging to bear its own electrical costs and offering support of local taxes.
“What we said is we will pay our own way so that our data center does not increase the cost of electricity for the region or for the neighbors, [and] we’ll replenish more water than we consume,” said Microsoft President Brad Smith in a TVW interview this month. “I just think it’s incumbent upon us to make the presence of a local data center positive for the community.”
Smith said the company has not endorsed HB 2515, but the company does “share the intent” of the measure. He did, however, note there are complex issues around electricity that need to get sorted out.
Amazon is promoting a self-funded, independent assessment of a subset of data centers that concluded the company more than covers its utility impacts. It emphasized the importance of the facilities and what it framed as a responsible approach to data center deployment in a January letter to U.S. senators investigating ratepayer impacts.
“Amazon is committed to being a good neighbor in the communities where we operate, paying our full electricity costs, and investing in the grid infrastructure that benefits all customers. Data centers are essential infrastructure for American competitiveness, commerce, and national security,” wrote Shannon Kellogg, vice president of public policy for Amazon Web Services in the Americas.
James Hove, Washington policy director for the nonprofit Climate Solutions, argues the new legislation simply puts some of these best practices into policy for all companies to follow.
“It really is codifying some of what we’re hearing those companies saying,” Hove said.
Transformations in Quincy
For Patrick Haley, city administrator for Quincy, the new legislation isn’t needed. The arrival of data centers two decades ago unleashed a surge in property taxes from the facilities that have helped fund new public infrastructure including a high school and police station, among other improvements.
In his testimony against HB 2515, Haley called it “the Quincy miracle.”
After the phone calls began, Karstetter left her job with the town’s chamber of commerce for Yahoo, where she worked to ensure its computing facilities could coexist peacefully with her community and others. After nearly a decade, she took at similar role with Microsoft, where she still works today, from Quincy.
“It’s really transformed our community,” she said. “And I think a lot of communities will be able to benefit from that.”
The question now is if communities can balance the benefits of hosting data centers with the energy and environmental costs that come with them, ensuring that the transformations are for the good.
