(The Center Square) – The Spokane City Council proposed an immediate one-year moratorium on data centers on Wednesday as Avista Utilities negotiates with a company seeking to build one in the region.
In an email to The Center Square, Jared Webley, Avista’s senior communications manager, declined to identify the customer or whether the proposed data center would be located inside Spokane city limits.
The utility provider recently filed a report with the U.S. Securities and Exchange Commission related to a nonbinding agreement with a company seeking to build a 125- to 500-megawatt facility. Webley said in his email that the memorandum of understanding does not set anything in stone for the project yet.
Councilmember Paul Dillon, who proposed the moratorium with Councilmembers Sarah Dixit and Kate Telis, said the measure provides time to consider data center regulations as part of the council’s upcoming comprehensive plan update.
Dillon said he plans to suspend the council’s rules to bring the moratorium to a vote on Monday night.
“I fundamentally have concerns with data centers,” Dillon told The Center Square, arguing that environmental risks and the level of water and energy they require outweigh the benefits.
The proposal comes just days after the Seattle City Council passed a one-year moratorium of its own.
Data centers are the backbone of the internet; streaming services, social media and anything available online rely on data centers to store and deliver information to users. However, they require significant amounts of power and water to cool the facility, raising concerns about who would pay for those costs.
The proposed moratorium would prevent Spokane from accepting or approving applications to expand or build new data centers within city limits for 12 months.
Dillon told The Center Square that he would have to look into whether the city has legal authority to enact a permanent moratorium.
“I think it’s incredibly premature, given that we have no idea what the actual impacts are going to be,” Councilmember Michael Cathcart told The Center Square. “There is no data center that is going to site in the city of Spokane in the near future, given the amazing hurdles that they will have to overcome.”
Cathcart argued that state and environmental regulatory processes would delay any data center plans within city limits for quite some time. However, he expressed many of the same concerns as Dillon and said he isn’t opposed to a moratorium, but doesn’t want to rush it to a vote without more information.
“If it’s going to have an adverse impact on my constituents, on their energy rates, on all these things, water quality, whatever; absolutely, I would be opposed [to the data center], but I can’t answer any of those questions [because] nobody has even given me the opportunity to ask,” Cathcart said Thursday.
Ratepayer risks and tax benefits
Avista’s 2025 Electric Integrated Resource Plan forecast peak loads of roughly 1,800 megawatts over the next few years; a 125-MW data center would account for roughly 7% of the projected peak load in 2026, with a 500-MW facility making up about 27% of the utility provider’s 2032 projected peak load.
In an earnings call last month, Avista executives confirmed they are negotiating over a potential data center and expected the customer to make a “significant contribution” to support existing ratepayers.
According to a transcript of that call, Avista has plans for $3.4 billion in capital expenditures through 2030, and this new large-load customer would require up to an additional $350 million in investment.
The next step for the company would be negotiating an engineering and procurement contract for the project.
“Affordability will remain a critical focus as the project’s details are developed, with the overall structure intended to provide net benefits to existing customers while supporting regional economic development, community investment, and grid infrastructure improvements,” the SEC filing states.
Public data center directories list several existing facilities within the city limits and the broader region, but the available records suggest that those are smaller colocation or telecom facilities.
The proposed moratorium would only impact potential data centers and expansion in Spokane of about 20 MW or more.
“I support this proposal,” Mayor Lisa Brown wrote in a press release. “The city of Spokane does not currently have the necessary framework to site and permit data centers. A moratorium will give us time to evaluate and plan … while keeping neighborhood and environmental impacts at the forefront.”
Dillon says the tax benefits of siting a data center within the city would be short-lived, since much of the revenue and jobs would come from construction. Once the facility is operating, it likely wouldn’t need the same level of oversight or personnel working day-to-day, aside from general maintenance.
He also raised concerns about draining or polluting the aquifer Spokane relies on for its drinking water.
Cathcart said he wants to see a cost-benefit analysis to determine exactly whether the benefits would outweigh any impact on his constituents. He added that new technology is emerging that allows data centers to reduce resource consumption and capture some of the heat they emit to generate power.
The conservative said the moratorium won’t prevent impacts on the grid or aquifer if the data center is located in the unincorporated county; it will just eliminate any tax revenue the city would’ve received.
“To the extent there are negative impacts, we will experience all of those, but to the extent that there are benefits, we will lose all of them,” Cathcart told The Center Square, “because there’s a 6% utility tax in the city that we will be foregoing, but again, same aquifer, same ground, same environment.”
According to Interconnected Capital, over 70 cities nationwide have imposed data center moratoriums.
An online petition calling for local officials to oppose data centers already has nearly 9,000 signatures.
State and federal regulations
State lawmakers considered legislation earlier this year that would’ve provided ratepayer protections by requiring data centers to implement measures to prevent cost shifting to existing customers. The measure stalled in the House, but state Democrats have said it will remain a focus moving forward.
To help balance a multi-billion-dollar state deficit, Democrats also recently repealed a tax exemption for data center replacement equipment. The move raised concerns among Republicans that the state is pushing prospective data centers to other states and could lead to a loss of tax revenue later on.
Another proposal sponsored by Spokane lawmakers would’ve created a new tax exemption specifically for data centers in the area. Still, like the proposal for ratepayer protections, it also failed to advance.
Both Cathcart and Dillon called on state and federal officials to consider regulations for data centers.
Webley from Avista said in his email that any data center in the area would require approval from the Washington Utilities and Transportation Commission, and that the utility recognizes Spokane’s questions and concerns.
“Regarding the proposed data center moratorium, Avista’s role is not to advocate for or against specific developments,” he wrote. “As the region’s energy provider, we are responsible for evaluating customer requests under our tariffs and ensuring any potential project aligns with reliability, affordability, and regulatory requirements.”
“We will continue to engage constructively with policymakers, regulators, and the community as these discussions evolve,” Webley said.
