AI data center plans baffle small southern Colorado town

BluSky AI, a Utah-based company, is proposing a 36-acre AI data center facility just north of Walsenburg, Colorado, as part of a larger plan for "next-generation AI Factories" in rural Western towns. Walsenburg Mayor Gary Vezzani and the town administrator were unaware of the company's purchase and sale agreement for the land when contacted by The Gazette, with Vezzani dismissing the plan as a "wild rumor." He expressed skepticism about the project bringing sufficient jobs or safeguarding the town's water rights, and stated he could not foresee the City Council cooperating on municipal utilities. This reaction contrasts with other towns approached by BluSky AI. Jason Pengelly, city manager for Wells, Nevada, also found the project unappealing due to minimal job creation and high energy consumption, leading Wells to develop specific data center rules. However, Nephi, Utah, has welcomed a 4-megawatt BluSky AI project. Nephi City Administrator Seth Atkinson explained that the town recently increased its energy capacity and lost a major employer, Owens Corning, making them open to selling electricity. The Nephi City Council approved the facility after adopting ordinances to regulate data centers. Policy analysts with Western Resource Advocates highlight the significant economic challenges in these rural communities, making data center proposals attractive despite potential immense impacts on energy and water, particularly for AI-focused facilities. In Colorado, legislators are currently debating two competing bills: Senate Bill 26-102 would require large data centers to source new renewable energy by 2031 and report consumption, while House Bill 26-1030 offers a 20-year sales and use tax exemption for developers meeting investment, job, and energy requirements, including water-free cooling systems. The Colorado Public Utilities Commission director, Rebecca White, referred to the legislative discussions as "the data center wars."