Data Centers’ Electricity Use Regulated in State
A new legislative package signed by New Jersey Gov. Mikie Sherrill mandates that large data centers pay for their own grid infrastructure upgrades and provide financial guarantees for electricity usage. The legislation also requires semi-annual public reporting on water and energy consumption to protect residents from utility bill increases as the tech industry expands.
Governor Mikie Sherrill of New Jersey recently signed a comprehensive legislative package designed to regulate large-load facilities, particularly AI data centers, by mandating they cover the costs of their own grid infrastructure upgrades. This trailblazing legislation aims to prevent these expenses from being passed on to New Jersey households amid the expanding presence of artificial intelligence and tech operations in the region.
The package includes three key energy bills. The Ratepayer Protection Act (A796/S731) requires data centers using 100 megawatts or more to finance their own grid infrastructure, including wires and substations, and to provide financial guarantees for at least 85 percent of their requested electricity demand over a decade. Additionally, Clean Energy and Efficiency Requirements compel large-scale operators to secure their own clean energy sources, reduce demand during peak hours, and reuse waste heat.
The third component, Resource Transparency (S3379), mandates that data center operators submit semi-annual water and energy usage reports to the New Jersey Board of Public Utilities, which will then be made public to monitor the industry's significant resource consumption. Assemblyman David Bailey Jr., representing Cumberland, Gloucester, and Salem counties, sponsored the bill, likening it to a "prenuptial agreement" that encourages data center development while ensuring they commit financially to their infrastructure needs.