Albanese Moves to Override Queensland on Data Center Power Rules, Federal Cabinet Meets Wednesday

Anthony Albanese heads into Wednesday's national cabinet meeting trying to force through new data center rules over the objections of two state governments, according to the ABC News (Australia). The fight is over who pays for the massive electricity demand AI data centers are about to dump on the grid, and whether Canberra even has the legal authority to make Queensland and the Northern Territory fall in line.

Energy Minister Chris Bowen wants a "causer pays" rule requiring data centers to buy their power from new renewable projects backed by gas, so the facilities don't jack up prices for everyone else. Queensland Premier David Crisafulli says he won't sign on to any rule that excludes coal and gas from the mix. The Northern Territory is with him.

Bowen isn't backing down. "The Queensland government's made their views pretty clear; we disagree with them, and we're proceeding without them," he said Sunday, according to the ABC. He accused Queensland of wanting an "open slather" approach that would let data centers build wherever, however, at any cost to consumers.

The federal Coalition says this whole plan might be illegal. Shadow Energy Minister Dan Tehan told the ABC he thinks Bowen is reaching for the corporations power to override a state, and called it constitutionally shaky. "He hasn't been clear on what he wants to use. It looks like he is going to attempt to use the corporations power, which would bring with it all types of legal uncertainty," Tehan said. If the federal government is going to steamroll a state on energy policy, it should be able to point to the specific constitutional power it's using, and right now the opposition says it can't.

Albanese also wants to ban large data centers from being built near schools, homes and farmland, following the community backlash that killed a proposed Blue Mountains data center near a school back in June. According to AFP reporting carried by The Peninsula Qatar, New South Wales alone is currently assessing 26 new data center projects worth AU$100 billion, on top of the 90 already operating in that state after 65 percent annual growth over three years.

The numbers behind this fight are staggering. The Australian Energy Market Operator's latest Electricity Statement of Opportunities, cited by The Guardian, projects data center power use will grow seven-fold over the next decade, from 5 terawatt-hours to 34 terawatt-hours by 2035-36, jumping from 3 percent to 13 percent of the country's overall electricity consumption. Under a high-growth scenario, AEMO says consumption could hit 52 terawatt-hours, a ten-fold jump. There are already 165 data centers operating in Australia, with another 225 in the pipeline.

AEMO's chief executive, Daniel Westerman, struck a more optimistic tone than the alarm bells elsewhere, saying "the reliability outlook has improved, supported by record levels of new generation and storage, and a strong pipeline of projects expected over the next decade." Climate Council chief executive Amanda McKenzie was blunter: "We've got one shot to get the rules right now and ensure that datacentre growth doesn't strain our grid and push up pollution."

This isn't just an Australian problem. Research from the Federal Reserve Bank of Dallas, reported by Fox News, found that existing U.S. data centers have already pushed average wholesale electricity prices up 2 to 6 percent nationwide, with sharper spikes in areas where the facilities cluster. The Dallas Fed's modeling for 2028 shows a middle-range scenario where the cost of generating electricity could run 20 to 30 percent higher than it would without new data center demand. That doesn't mean your bill jumps 20 to 30 percent. Wholesale power is only about half of what shows up on a retail bill, and those increases take time to filter down. But the direction is not in dispute: costs are going up, and data centers are a major reason why.

Bowen's answer is that data centers should pay their own way and not push the bill onto households. Queensland's answer is that restricting the energy mix to renewables-plus-gas will slow investment and cost jobs. Both arguments are being made in good faith by elected officials who ran on different platforms, and neither has been tested by an actual vote in parliament yet.

Whether Albanese gets an agreement at Wednesday's national cabinet meeting, or has to legislate over Queensland's objection using disputed constitutional powers, remains an open question. So does whether the promised national AI law, covering copyright, security standards and skills development, gets introduced next year as Albanese has signaled. The AEMO report also flagged that more than a third of the data center projects listed in 2025 have already been cancelled, a reminder that the seven-fold growth forecast is a projection, not a certainty.