N.J. Assembly passes bill aiming to protect electric customers from data center costs

The New Jersey General Assembly approved a bill designed to safeguard residential and small business electric customers from rising costs attributed to hyperscale data centers. Sponsored by Assemblyman David Bailey Jr., the legislation mandates that public electric utilities in New Jersey establish specific rate tariffs for data centers consuming at least 100 megawatts of electricity. These tariffs would ensure that data centers bear the costs associated with the grid infrastructure upgrades their operations necessitate, rather than having those costs absorbed by other utility customers. Bailey described the bill as a "prenuptial agreement," emphasizing the desire for data centers to locate in New Jersey, but requiring them to financially commit to their stated energy usage. Brian Lipman, director of the New Jersey Division of Rate Counsel, explained that the bill would prevent all ratepayers from subsidizing potentially $100 million in grid upgrades. However, Lipman noted that the bill addresses only electricity delivery costs, not increases in the cost of electricity supply itself, which are influenced by regional market forces and rising demand from data centers across the PJM Interconnection region. Addressing supply costs, Lipman suggested, would require a collaborative approach with other PJM states to potentially mandate data centers supply their own power generation.