Legislation intended to protect consumers from data center costs sent to the governor
New Jersey lawmakers have sent legislation to Governor Mikie Sherrill that would require utility companies to implement cost-containment rules for large-load data centers. The bill aims to prevent residential customers from subsidizing the high electricity consumption of these facilities. This action is part of a broader statewide plan to address the growing impact of data centers on energy demand and consumer costs.
The New Jersey Senate has approved and forwarded legislation to Governor Mikie Sherrill that mandates utility companies develop cost-containment rules for data centers. Sponsored by state Senators John Burzichelli and John McKeon, the bill (S-731/A-796) passed the Senate 27-11 after previously clearing the Assembly.
The new rules would target "large-load" energy users consuming over 100 megawatts monthly, predominantly data centers. Senator Burzichelli emphasized the need to prevent the high energy expenses of AI-fueled data centers from being passed on to homeowners and small businesses, while Senator McKeon highlighted the implications for the regional grid and consumer costs due to concentrated data center growth. The legislation requires each electric public utility to file an application with the Board of Public Utilities to establish an appropriate fee structure for data centers.
This legislative action comes as grid operator PJM projects 32 GW of energy demand growth by 2030, with 30 GW attributed solely to planned data center development. New Jersey, with 100 data centers, ranks 13th nationally in data center capacity. Governor Sherrill previously announced a statewide plan in May to address the environmental and energy impacts of data centers, noting concerns and opposition from various municipalities, environmental groups, and political leaders, with some towns like Warren, Red Bank, and Millville already banning data centers within their limits. The administration believes these measures will help hold data centers accountable while also positioning the state for AI innovation.