As Smithfield moves to ban data centers, lawmakers debate how to define them

Smithfield, Rhode Island, is facing a contentious debate over the potential development of data centers within its borders, leading local officials to consider a two-year ban. The Smithfield Planning Board recently voted to send a proposed zoning amendment to the Town Council that would define data centers and then prohibit them in all zoning categories for at least two years. This move comes as an investment group, Hanton City Investments, named after a local historic site, is exploring the possibility of a data center as a potential tenant for a proposed business park near the Fidelity Investments campus. Nick Nybo, senior legal counsel for Revity Energy and spokesperson for Hanton City Investments, indicated that a data center is one option being considered to financially catalyze the business park. However, Town Council President John Tassoni Jr. believes the concern is premature as no formal applications have been submitted. Concurrently, Rhode Island state lawmakers are grappling with how to regulate data centers, introducing multiple bills in the General Assembly to define the facilities, particularly regarding their electricity consumption thresholds (ranging from 20 to 50 megawatts). House Speaker Pro Tempore Brian Patrick Kennedy (D-Westerly) and Rep. June Speakman (D-Warren) have sponsored bills aiming to safeguard ratepayers from potential cost increases due to data center energy demands and grid upgrades. Sen. Lou DiPalma (D-Middletown) is leading a third path, sponsoring a bill for a 30-year sales and use tax exemption for data centers, which Hanton City Investments supports, alongside a "guardrails" bill identical to Kennedy's. DiPalma emphasizes that tax breaks and safeguards must pass as a package. The Public Utilities Commission (PUC) has submitted neutral testimonies on the proposed bills, noting the complexity of allocating costs and the "very project specific" nature of data center impacts on ratepayers. Rhode Island Energy also highlighted the region's "structurally limited" energy capacity. All Statehouse bills related to data centers have been held for further study, indicating ongoing legislative uncertainty. The debate underscores broader concerns about the intensive electricity and water usage of large-scale data centers, and the need for comprehensive state and local policies to manage their proliferation and potential impacts.