A new state law makes it easier for private companies to build power plants for massive industrial customers. The push is driven by AI data centers. The questions being asked across Nebraska: who benefits, who pays, and what happens to the water?
The contradiction at the center of this
Gov. Pillen has called for a pause on building new data centers in Nebraska. On June 2, 2026, he ceremonially signed a law making them significantly easier to build.
Pillen's stated reason: Nebraska already ranks second in the nation for share of electricity consumed by data centers (11.5%), and the growth is straining the grid. He said an associate of Cargill told him the company can't expand in Nebraska at the pace it would like, because data centers are consuming too much power.
His argument for the law: AI is a national security issue. "We have to win the war on artificial intelligence," Pillen said. "It's a race." He drew a distinction between data centers (bad, too many) and AI infrastructure (necessary, strategic). Whether that distinction holds up in practice remains to be seen.
Signed April 14, 2026 · Introduced by Sen. Barry DeKay at Gov. Pillen's request
Nebraska has been an all-public-power state since the 1930s, one of only two in the nation. Every power plant has been owned and governed by publicly controlled utilities with elected boards. LB 1261 creates the first carve-out from that model.
The law allows private companies to build and own power plants in Nebraska, provided they serve a single industrial customer with a new electricity demand exceeding 1,000 megawatts at a single site. For reference, Lincoln uses about 800 megawatts at summer peak. This threshold effectively describes one type of customer: a hyperscale AI data center.
The law also removes the risk that a public power district could seize a privately built plant using eminent domain. That protection is what made private investment legally risky before. Now it isn't.
The stated rationale
Sen. Mike Moser of Columbus, who prioritized the bill, said the logic is that if a private company builds and owns the plant, and the market shifts or the data center closes, the cost falls on the private company, not on Nebraska ratepayers. Tenaska's Delette Marengo put the price tag bluntly: new power plants carry a multibillion dollar price tag.
OPPD serves the Omaha metro including Sarpy County. In six years, data centers went from 1% of OPPD's electricity sales to 21%. By 2035, OPPD's own projections show data centers consuming 41% of everything OPPD generates.
Meanwhile, OPPD approved a 6.3% average rate increase for 2026. Residential customers saw 8.4% in 2025 and 6% in 2026. Utility officials say data center growth is not the direct cause of rate increases, attributing them instead to infrastructure upgrades. But the timing and scale of the grid investment being driven by data center demand makes that a complicated argument.
On the tax side, Sarpy County commissioners testified that existing state tax incentives for data center equipment and electricity are already costing the county $5.8 million per year in lost property tax revenue. That's money that would otherwise fund schools, roads, and county services.
Confirmed details only — key parties have not publicly confirmed involvement
Internal documents obtained by Flatwater Free Press and Grist from a private Nebraska public power district meeting in January 2026 described a proposal for what could be the largest data center in Nebraska history, located in southeast Nebraska.
Confirmed
Not confirmed
For context on scale: 3,000 megawatts would be more than twice the output of Nebraska's largest existing power plant. The proposed facility would consume more electricity than Lincoln's entire peak summer demand.
The conflict of interest
State Sen. Myron Dorn voted on LB 1261 without initially disclosing that he had signed a land option agreement with Tenaska — the company positioned to profit from it.
Flatwater Free Press reported that Dorn had given Tenaska exclusive rights to purchase approximately 80 acres of his land in Gage County. When reporters contacted him on March 17, 2026 — the same day floor debate on LB 1261 began — Dorn said:
"Hadn't thought of it. Didn't realize the bill was out of committee and up that quick."
Dorn filed a conflict-of-interest disclosure that day but chose not to abstain from the vote, reasoning that his was "only one of 49" votes. The Nebraska Accountability and Disclosure Commission's executive director stated Dorn should have filed the disclosure ahead of any discussion or vote on the bill.
Flatwater Free Press investigation ↗Otoe County — moratorium
In May 2026, the Otoe County Board of Commissioners voted to suspend all new data center permits for up to one year. This came after Tenaska optioned land in the county. Gage County's planning commission held moratorium hearings in June 2026.
Adams, Nebraska — town hall
Nearly 70 people filled the local community center in late April 2026 to hear about the proposed data center and power plant project. Residents raised concerns about water, heat, electricity availability, and the fact that nobody had officially informed their community about the plans.
Nebraska Farmers Union
President John Hansen called the bill "tone deaf" and objected that it was developed by the governor's office, a handful of public power executives, and private companies without the normal public and transparent process that Nebraska's public power system is built on. He also raised the concern that large natural gas plants for data centers will compete with agricultural uses of natural gas, potentially raising fertilizer costs.
What happens to the Ogallala Aquifer?
Large data centers use between 1 and 5 million gallons of water per day for cooling. The Ogallala Aquifer already faces severe depletion. A transparency law passed alongside LB 1261 requires annual disclosure of water usage — but that data doesn't exist yet. Sen. Conrad's amendments requiring disclosure of water sourcing during the debate were rejected.
Will this raise your utility bill?
OPPD rates have risen roughly 20% since 2021. Utilities say data center growth isn't the direct cause — they attribute increases to infrastructure upgrades. But the infrastructure being upgraded is driven largely by data center demand. At 41% of OPPD's sales by 2035, data centers will shape rate decisions whether or not they're officially named as the cause.
Who actually benefits locally?
Data centers generate significant construction jobs but very few permanent ones. Google already operates a data center in Papillion and runs a workforce training program with Metropolitan Community College. Whether the jobs and tax revenue justify the cost to local infrastructure and resources is a question Sarpy County commissioners have already started raising.
Does carbon capture actually work at this scale?
The proposed project reportedly includes carbon capture and storage as part of its environmental case. Yale economist Kenneth Gillingham said plainly: there is nothing in the U.S. this large with CCS. It is unproven technology at the scale being described.
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