To facilitate the responsible development of data centers and related infrastructure, to protect existing ratepayers from the shifting of incremental infrastructure costs attributable to large-load facilities, to encourage investment in water reuse, and for other purposes.

(1) Artificial intelligence has the potential to drive economic growth, accelerate scientific and medical innovation, strengthen American competitiveness, and enhance the national security of the United States.

(2) Maintaining American leadership in artificial intelligence over the Chinese Communist Party will require the responsible development of data centers and advanced computing infrastructure; and to do so, the United States is experiencing rapid growth in large electrical loads, including data centers and advanced computing facilities, some of which require power at a scale comparable to that of major metropolitan areas.

(3) The effects of new large electrical loads on electricity costs are not uniform across the United States and depend on regional resources, market structure, utility regulation, and the allocation of costs associated with serving such loads. Absent appropriate safeguards, such loads may place upward pressure on power costs, reduce access to Federal resources, and create risks to regional electric reliability.

(4) The electric-power sector of the United States is characterized by diverse regional markets, resource mixes, utility structures, regulatory systems, and reliability needs. State regulatory authorities, nonregulated electric utilities, regional transmission organizations, and other relevant entities should retain flexibility to implement solutions appropriate to the communities they serve.

(5) Water reuse projects, including onsite water recycling systems within data center facilities and municipal water recycling systems, can protect aquifers by replacing the use of freshwater, such as rivers, streams and groundwater, with recycled water and support the responsible development of data centers and other industrial facilities.

(1) the United States should pursue an all-of-the-above strategy to develop the energy and water infrastructure required to maintain global leadership in artificial intelligence;

(2) the United States should address demonstrated and localized infrastructure impacts through targeted, evidence-based measures rather than broad restrictions, blanket moratoria, or policies that impede responsible development;

(3) large-load customers should be encouraged to build, bring, or buy new and additive generation resources and should bear the full incremental cost of the infrastructure required primarily to serve their facilities;

(4) the development of data centers and advanced computing facilities should be addressed through regionally appropriate policies that protect affordability and reliability while allowing responsible economic development; and

(5) water reuse should be encouraged through investment in projects that install, replace, or modify onsite water recycling systems, replace the use of freshwater with recycled water from a municipal water provider, or build or expand municipal water recycling systems.

Section 111(d) of the Public Utility Regulatory Policies Act of 1978 (16 U.S.C. 2621(d)) is amended by adding at the end the following:

A rate charged, or entered into, by an electric utility for providing electric service to a large-load customer shall be designed to recover from the large-load customer the full, incremental cost of any generation, transmission, or distribution upgrade necessary to serve the load of such large-load customer, including in the event of such large-load customer terminating a contract with the electric utility pertaining to the sale of electric energy, or otherwise ceasing the purchase of electric energy from the electric utility.

Before making any generation, transmission, or distribution upgrade that is necessary to serve the load of a large-load customer, an electric utility shall require the large-load customer provide to the electric utility financial assurances or contributions to cover the cost of such upgrade.

In this paragraph, the term large-load customer means a non-residential retail electric customer that, on or after the date of the enactment of this paragraph, requests to enter into, or enters into, a contract pertaining to the sale of electric energy for one or more facilities that—

(i) are behind a single point of interconnection; and

(ii) have, in the aggregate, a peak electric demand of 100 megawatts or more at a single site or campus.

Section 111(d) of the Public Utility Regulatory Policies Act of 1978 (16 U.S.C. 2621(d)), as amended by section 101 of this Title, is further amended by adding at the end the following:

Each electric utility shall consider the establishment of rates, contracts, tariffs, service agreements, or other mechanisms under which service to a large-load customer is encouraged or required to develop, acquire, finance, or contractually dedicate new or incremental generation resources sufficient to serve the projected load of such large-load customer and, where feasible, to provide additional capacity, energy, capacity attributes, or other resource benefits for the benefit of other customers.

In carrying out subparagraph (A), including as a means of satisfying or supplementing the standard described in paragraph (22), each electric utility shall consider mechanisms under which any capacity, energy, capacity attributes, or other resource benefits in excess of the projected load of such large-load customer may be made available, through long-term contracts or other market-based mechanisms, to load-serving entities serving residential, agricultural, small business, or other existing customers.

A State regulatory authority, with respect to each electric utility for which the State regulatory authority has ratemaking authority, and each nonregulated electric utility may implement the standard under this paragraph through—

(i) physical allocation of generating capacity;

(ii) long-term power purchase agreements;

(iii) contractual or financial arrangements;

(iv) market-based mechanisms;

(v) tariff conditions or special contracts for large-load customers; or

(vi) any other mechanism determined appropriate by the State regulatory authority or nonregulated electric utility.

Nothing in this paragraph shall be construed to require a State regulatory authority or nonregulated electric utility to mandate the physical allocation of generating capacity or to require a uniform percentage set-aside of new or incremental generation resources.

In this paragraph, the term large-load customer has the meaning given such term in paragraph (22)(C).

Section 112 of the Public Utility Regulatory Policies Act of 1978 (16 U.S.C. 2622) is amended—

(1) in subsection (b), by adding at the end the following:

(A) Not later than 1 year after the date of enactment of this paragraph, each State regulatory authority (with respect to each electric utility for which the State has ratemaking authority) and each nonregulated electric utility shall commence consideration under section 111, or set a hearing date for consideration, with respect to the standard established by paragraph (22) of section 111(d).

(B) Not later than 2 years after the date of enactment of this paragraph, each State regulatory authority (with respect to each electric utility for which the State has ratemaking authority) and each nonregulated electric utility shall complete the consideration and make the determination under section 111 with respect to the standard established by paragraphs (22) and (23) of section 111(d).;

(2) in subsection (c)—

(A) by striking subsection (b)(2) and inserting subsection (b); and

(B) by inserting In the case of the standard established by paragraphs (22) and (23) of section 111(d), the reference contained in this subsection to the date of enactment of this Act shall be deemed to be a reference to the date of enactment of that paragraph (22) and (23). after paragraph (21).; and

(3) by adding at the end the following:

Subsections (b) and (c) shall not apply to the standard established by paragraphs (22) and (23) of section 111(d) in the case of any electric utility in a State if, before the date of enactment of this subsection—

(1) the State has implemented for the electric utility the standard (or a comparable standard);

(2) the State regulatory authority for the State or the relevant nonregulated electric utility has conducted a proceeding to consider implementation of the standard (or a comparable standard) for the electric utility; or

(3) the State legislature has voted on the implementation of the standard (or a comparable standard) for the electric utility.

Section 124 of the Public Utility Regulatory Policies Act of 1978 (16 U.S.C. 2634) is amended by adding at the end the following: In the case of the standard established by paragraph (22) of section 111(d), the reference contained in this section to the date of enactment of this Act shall be deemed to be a reference to the date of enactment of that paragraph (22)..

Subpart E of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after section 48F the following:

For purposes of section 46, the qualifying additive generation project credit for any taxable year is an amount equal to 30 percent of the qualified additive investment, as determined under subsection (b), for such taxable year.

For purposes of this section, the term qualified additive investment means the portion of the qualified investment in qualified property placed in service during the taxable year that is properly allocable to creditable excess capacity.

For purposes of this section, the term creditable excess capacity means the portion of new or incremental electric generation capacity that—

(1) exceeds the projected peak electric demand of a covered large-load facility;

(2) is made available to one or more eligible load-serving entities pursuant to a long-term contract or other binding written agreement; and

(3) does not exceed 50 percent of the projected peak electric demand of such covered large-load facility.

For purposes of this section, the term qualifying additive generation project means a project that—

(1) develops, constructs, acquires, finances, or contractually dedicates new or incremental electric generation resources to support a covered large-load facility;

(2) makes creditable excess capacity available to one or more eligible load-serving entities; and

(3) does not shift generation, transmission, distribution, interconnection, stranded, or other infrastructure costs attributable to the covered large-load facility to existing residential, agricultural, small business, or other existing customers.

No credit shall be allowed under this section unless the taxpayer certifies, in such form and manner as the Secretary may require, that—

(A) the projected peak electric demand of the covered large-load facility is supported by an engineering study, utility service agreement, interconnection study, or other documentation determined appropriate by the Secretary, in consultation with the Secretary of Energy;

(B) the creditable excess capacity is subject to a long-term contract or other binding written agreement with one or more eligible load-serving entities; and

(C) such creditable excess capacity is reasonably expected to be deliverable to such eligible load-serving entities.

The Secretary shall provide rules for the recapture of all or a portion of any credit allowed under this section if, during such period as the Secretary determines appropriate—

(A) the taxpayer materially increases the electric demand of the covered large-load facility in a manner that reduces or eliminates the creditable excess capacity;

(B) the taxpayer terminates or materially reduces the long-term contract or other binding written agreement described in paragraph (1)(B); or

(C) the Secretary determines that the projected peak electric demand of the covered large-load facility was materially understated.

For purposes of this section—

The term covered large-load facility means one or more nonresidential facilities behind a single point of interconnection that have, in the aggregate, a peak electric demand of 100 megawatts or more at a single site or campus.

The term eligible load-serving entity means an electric utility, public power utility, electric cooperative, municipal utility, investor-owned utility, Federal power marketing administration customer or preference customer, or any other load-serving entity determined appropriate by the Secretary.

The term long-term contract means a contract, tariff, service agreement, power purchase agreement, capacity agreement, or other binding written arrangement with a term of not less than 10 years.

The term qualified property means tangible property that is used as an integral part of a qualifying additive generation project, with respect to which depreciation or amortization is allowable, and the original use of which begins with the taxpayer.

The Secretary, in consultation with the Secretary of Energy and the Federal Energy Regulatory Commission, shall issue such guidance as may be necessary to carry out this section, including guidance for determining qualified additive investment, projected peak electric demand, creditable excess capacity, deliverability, and prevention of cost shifting.

This section shall not apply to any qualifying additive generation project placed in service more than 10 years after the date of enactment of this section.

Section 46 of the Internal Revenue Code of 1986 is amended by adding at the end the following:

(8) the qualifying additive generation project credit.

The table of sections for subpart E of part IV of subchapter A of chapter 1 of such Code is amended by inserting after the item relating to section 48F the following:

The amendments made by this section shall apply to qualifying additive generation projects the construction of which begins after the date of enactment of this Act.

Subpart E of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after section 48E the following new section:

For purposes of section 46, the qualifying water reuse project credit for any taxable year is an amount equal to 30 percent of the qualified investment for such taxable year with respect to any qualifying water reuse project of the taxpayer.

For purposes of subsection (a), the qualified investment with respect to any qualifying water reuse project for any taxable year is the basis of qualified property placed in service by the taxpayer during such taxable year which is part of such qualifying water reuse project.

For purposes of this subsection, the term qualified property means property—

(A) which is tangible property,

(B) with respect to which depreciation (or amortization in lieu of depreciation) is allowable, and

(C) which is—

(i) constructed, reconstructed, or erected by the taxpayer, or

(ii) acquired by the taxpayer if the original use of such property commences with the taxpayer.

Rules similar to the rules of subsections (c)(4) and (d) of section 46 (as in effect on the day before the enactment of the Revenue Reconciliation Act of 1990) shall apply for purposes of this section.

For purposes of this section—

The term qualifying water reuse project means a project which—

(A) installs, replaces, or modifies an onsite water recycling system within an industrial, manufacturing, data center, or food processing facility,

(B) replaces the use of freshwater, such as groundwater, with recycled water from a municipal water provider for the production of goods or provision of services by the taxpayer, or

(C) builds or expands a municipal water recycling system for the purpose of securing recycled water for the production of goods or provision of services.

The term water recycling system means infrastructure needed for the production, storage, conveyance, and use of recycled water.

The term recycled water means former wastewater, including both industrial and municipal wastewater, that has been treated and cleaned for a specific beneficial use.

In the case of any qualified transfer property transferred from a person to a utility—

(A) such property shall be treated as qualified property with respect to such person,

(B) such person shall be treated as having placed such property in service at the time of such transfer,

(C) the basis of such person in such property which is taken into account under subsection (b)(1) shall be the basis of such person in such property at the time of such transfer, and

(D) such property shall not be taken into account for purposes of determining any credit allowed under this section to such utility.

For purposes of this subsection, the term qualified transfer property means property transferred from a person to a utility if—

(A) such property is qualified property with respect to such utility, and

(B) such person and such utility enter into a binding written agreement under which such person is treated as eligible for the credit allowed under this section with respect to such property in lieu of such utility.

This section shall not apply to any qualified investment with respect to any qualifying water reuse project unless such project is placed in service not later than the date which is 10 years after the date of the enactment of this section.

Section 46 of such Code is amended by striking and at the end of paragraph (7), by striking the period at the end of paragraph (8) and inserting, and, and by adding at the end the following new paragraph:

(9) the qualifying water reuse project credit.

The table of sections for subpart D of part IV of subchapter A of chapter 1 of such Code is amended by inserting after the item relating to section 48E the following new item:

The amendments made by this section shall apply to qualifying water reuse projects (as defined in section 48F of the Internal Revenue Code of 1986, as added by this section) the construction of which begins after the date of the enactment of this Act.