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

Illinois lawmakers are currently considering the Protecting Our Water, Energy and Ratepayers Act, or the POWER Act, which was introduced in early February by State Sen. Ram Villavalam with support from the Illinois Clean Jobs Coalition. The proposed legislation, which currently sits in committee, aims to comprehensively regulate hyperscale data centers in Illinois, particularly regarding their energy and water usage. Key provisions of the POWER Act include requiring data centers to pay for their own energy, utilize renewable sources, obtain water use permits from the Illinois Environmental Protection Agency, and assess and mitigate negative community impacts such as noise and pollution. The act proposes a "bring your own new clean capacity and energy" (BYONCCE) strategy, which would allocate new energy grid costs to data centers rather than general ratepayers. Additionally, it mandates quarterly water usage reporting, water resource planning, and encourages less wasteful closed-loop cooling technologies. The Union of Concerned Scientists contributed research to the bill, highlighting that data centers could account for up to 72% of Illinois' electricity demand growth by 2030, potentially increasing costs by $24 billion to $37 billion. Environmentalists and community advocates, including Professor Griffin Thompson and the Alliance for the Great Lakes, express concerns over the high energy and water demands of AI data centers, particularly given Chicago's proximity to Lake Michigan and its growing number of facilities. A March 2026 poll by Global Strategy Group indicated 67% of Chicagoans supported the bill. Conversely, the Data Center Coalition, an industry association, has voiced concerns about the bill creating an "increasingly challenging regulatory environment" that could jeopardize future data center investment in Illinois, claiming over $100 billion in projects have already bypassed the state due to existing regulations. Advocates for the POWER Act are pushing for its passage this spring or in the fall 2026 veto session.