(The Center Square) – Louisiana is moving to an invitation-only process for data centers seeking lucrative state tax exemptions, as the state remains unable to estimate how much revenue it stands to lose through the incentive program.

Louisiana Economic Development announced the change alongside a new framework intended to protect utility customers from bearing the electricity costs of large data center developments and hold companies accountable for promises made in exchange for tax breaks.

But the financial implications of those exemptions remain unclear. As previously reported by The Center Square, the Louisiana Department of Revenue was unable to estimate the cost of the Data Center Sales and Use Tax Exemption in its latest report on state tax incentives.

In a statement, the department said the program lacked historical data from which to estimate future revenue losses.

“The bottom line is that we are gaining revenue,” state Sen. Jay Morris, R-West Monroe, said in a response on social media. “Look at the increase in Richland parish alone. All the surrounding parishes are seeing increases in revenue and the state has a surplus.”

The exemption allows qualifying data centers to avoid state and local sales and use taxes on eligible equipment, construction materials and other project-related purchases for up to 20 years, with a possible 10-year extension.

The new framework follows a June executive order by Gov. Jeff Landry directing LED to establish safeguards for ratepayers and communities affected by large, energy-intensive developments within 90 days.

“The framework is designed to make these commitments measurable and meaningful by tying them directly to eligibility for the Data Center Sales and Use Tax Exemption,” LED said in a statement to The Center Square.

Before receiving the exemption, developers must explain how they will finance electricity generation, transmission and other infrastructure associated with their projects, along with safeguards intended to prevent those costs from being passed along to existing residential and commercial customers.

Companies must also establish measurable commitments and report their progress to LED throughout the life of their projects.

The new framework includes requirements addressing grid reliability, workforce development, local tax revenues, natural resources, community investment and accountability.

A 17-page application dated Oct. 7 asks developers to outline their anticipated electricity demand, capital investment, employment figures, water consumption and other commitments. It also requires applicants to explain how they intend to measure their performance and address shortcomings if those commitments are not fulfilled.

However, the application does not specify uniform financial penalties for violating those promises or establish how frequently companies must report their progress.

The Alliance for Affordable Energy, a utility consumer advocacy organization, questioned whether the framework gives LED sufficient authority to ensure companies comply with their commitments.

“Louisiana Economic Development agency has the leverage to urge data centers into compliance in exchange for those tax incentives, but as of now, there’s not a clear standard for evaluating what the applicant writes on page 7 of the questionnaire, nor a legal path for LED to directly force the data center into compliance,” the organization said in comments provided to The Center Square.

Page 7 asks applying companies to describe how they will create “high-quality employment opportunities for Louisiana residents.”

Existing Louisiana law does authorize LED to terminate tax exemption agreements and permits state and local taxing authorities to recover taxes when companies fail to meet statutory or contractual obligations.

The statute requires qualifying data centers to attest that they will create at least 50 permanent jobs and intend to invest $200 million in Louisiana.

The Alliance also emphasized that the Louisiana Public Service Commission, rather than LED, has constitutional authority to regulate utility rates and determine how electricity costs are distributed among customers.

LED acknowledged that distinction.

“The framework does not replace the PSC’s regulatory authority over utility companies,” the agency said. “Any utility proposal involving new generation, transmission or recovery of those costs remains subject to the applicable PSC review and approval process.”