Congress quietly exempts new power companies from safety rules
S. 3585 — DATA Act of 2026 · Filed by Tom Cotton (R-AR) · Introduced Jan 7, 2026 · Referred to committee
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What it does
This bill creates a new category of electric utility called a 'consumer-regulated electric utility' (CREU) that can generate and sell electricity to customers but is exempt from nearly all federal regulation—including reliability standards, rate oversight, and interconnection requirements—as long as it remains physically isolated from the main power grid. The bill allows these utilities to operate independently without FERC oversight, PURPA obligations, or holding-company regulations, while still being able to use public rights-of-way for construction.
Why we flagged it
The bill's core function is to carve out a new class of electric utilities from federal oversight and reliability standards. While framed as enabling 'decentralized' alternatives, it mechanically exempts operators from the regulatory framework that protects grid stability and consumer interests.
What the text implies
- CREUs can operate in 'islands' serving specific customers (e.g., industrial parks, wealthy enclaves) without reliability obligations, potentially creating a two-tier electricity system where some customers have lower standards of service.
- The exemption from PURPA (Public Utility Regulatory Policies Act) means CREUs have no obligation to interconnect or purchase power from renewable or small-scale generators, potentially blocking distributed renewable energy integration.
The full analysis lists 5 implications of this text.
Who stands to gain
private electricity operators / microgrids; industrial and commercial real-estate developers; technology companies operating private power systems