New Jersey's Data Center Boom — Who Really Pays the Power Bill
If you live in New Jersey, and not under a rock, you may have noticed that your electric bills have gotten more expensive. In June 2025, New Jersey bills surged 20 percent, and reporting from New Jersey Policy Perspective lays the blame squarely on data centers.[1] The national picture explains why usage keeps climbing. American data centers burned through roughly 176 terawatt-hours in 2023 — 4.4 percent of the country's entire electricity supply — and forecasts have that doubling or tripling by 2028.[2]
That increase on demand will severely strain PJM, a regional operator that runs the grid across a dozen states, including New Jersey, and its yearly capacity auction — the market that sets what utilities pay to lock in enough power. In the 2025/2026 auction, PJM's independent market monitor pinned 63 percent of the price jump on data centers: $9.3 billion, billed out across every state in PJM's footprint, New Jersey included.[3] The billing burden is only going to get heavier: by 2030, close to a tenth of all the electricity New Jersey uses will feed AI data centers — the power equivalent of plugging in the entire state of Rhode Island.[4]
Unfortunately, holding this increase in check is not so easy as restricting a windowless building on the edge of your town form becoming a data center. Rutgers' New Jersey State Policy Lab ran the ZIP-code numbers across 24 states and came up empty on local impact — living near a data center moved the average bill by about 90 cents a month, so pretty much zero impact.[5] The issue comes more from the aggregate data center burden increase on the PJM grid than local operations. In a sense, that makes it harder for state government to drive lower costs for consumers, since much of the stress on PJM’s regional wholesale market is coming from out of state.
That’s a problem likely to continue worsening in the near term. If national demand keeps compounding on its current trajectory, New Jersey's slice of the PJM tab grows right along with it — just another screw turning on New Jersey families every month.[6] The open question here is whether New Jersey can actually flatten that cost curve, which, frankly, nobody can say for sure at this point.
Still, the political temperature on this issue continues to rise, and with the federal government doing very little to date (if anything, pushing for further data center construction), the states have attempted to fill the void. Twenty-four of them, in fact, signed off on at least one large-load tariff by June 2026, with four more on the way[7]. Ohio led with the bluntest version: its Public Utilities Commission made AEP Ohio write a data-center tariff that pins new large customers — 25 megawatts and above — to at least 85 percent of the power they reserve for as long as 12 years, whether they draw it or not, settled out in the open through a public process and a hearing.[8][9] Virginia reached further, bolting a new large-load rate class — 85 percent of contracted distribution and transmission demand, 60 percent of generation — onto a first-of-its-kind consumption tax of 1.1 cents per kilowatt-hour, capped at $600 million a year.[10][11]
Governor Mikie Sherrill deserves credit for treating the utility cost crisis seriously and pushing New Jersey down a path toward effective action — she made it a central issue of her campaign (even at odds with the sitting governor from her party), declared an actual state of emergency on January 20, 2026, her first day, froze rate hikes and told regulators to support more generation. In May came the four-part data-center plan: companies pay for their own power and grid work (85% of requested service for a minimum of 10 years), disclose their usage publicly, sign community benefit agreements, and staff with union labor.[12] On July 7 she signed three related bills — the Data Center Fair Share Act (A796/S731), a repeal of a utility perk called the ROE Adder (A2757/S1673), and the Advanced Grid Technologies Act (A5188/S4411) — while cutting every household a $25 credit and lower-income families another $150, all pegged to a projected billion-plus in yearly savings.[13] Look closely at what slipped away, though. The community benefit agreements and the union-labor mandate didn't survive drafting, and the public-disclosure promise only half survived: the usage reports stay at the Board of Public Utilities and go no further.
It’s useful to compare this action to what ratepayer advocates have been asking for. The Institute for Local Self-Reliance's national blueprint sets four bars: data centers paying their full infrastructure cost, hard demand-flexibility requirements, clean power for every bit of new demand, and a structural split between the firms running the grid and the ones owning the plants.[14] In practice, New Jersey's law orders every electric utility to file a BPU tariff for large-load data centers, with the board free to set the threshold anywhere up to 50 megawatts. Tallying it up: cost allocation, cleared — though grandfathering slips any data center approved before the law took effect out the side door. Demand flexibility, cleared. Clean energy, encouraged but not required. Structural separation, untouched. And enforcement — the hinge the whole thing swings on — rests on performance reports that reach the BPU but are unavailable to the public. This last part is the biggest gap, since industry pledges to shield ratepayers count for nothing without enforcement anyone can actually verify.[15]
Give New Jersey its due: this is a real first step, and a longer stride than most states have taken. Still, there’s more we can do, especially with data center energy demand expected to continue exploding. Three patches we’d recommend:
• Open the tariff to the public, and close the grandfather door. As written, the demand-flexibility reports that would show whether utilities are keeping their word go to the BPU and nowhere else — out of reach for Rate Counsel, and out of reach for you. New Jersey has no excuse for that, because it wrote the better rule into the same signing: the Advanced Grid Technologies Act guarantees public access and a 30-day comment window on its own utility filings. The BPU should hold A796's tariff to that identical bar as it drafts the rules this year — and lean on that same rulemaking to shrink the grandfather clause so it stops quietly clearing most of the data centers already standing. Fortunately, we don’t need a new law to begin: the BPU is empowered to make these changes already under its current ratemaking powers.
• Take structural separation seriously. ILSR's framework wants the grid operators pried apart from the plant owners, to defuse the conflict of interest built into any utility that profits from both ends.[16] New Jersey's law leaves it entirely alone. We're asking the state to study it as a potential next step — although complicated to manage, stamping out incentives for a conflict of interest will benefit customers in the long run.
• Move the bills that cover the profit side. A796/S731 governs what utilities can bill data centers to build. It's silent on what utilities are permitted to earn on the rate cases all that spending runs through — and earnings are where the serious money changes hands. A1208/S728 would require the BPU to apply a lowest-reasonable-return-on-equity test before approving any electric, gas, or water rate case. A2398/S1818 — the Public Utility Fair Profit Act — would have utilities square actual revenue against approved revenue each year and refund the surplus to customers as credits. These two bills help mind the profit side of the equation. New Jersey ought to pass them.
• Cooperate with other states. More broadly, any multi-state network will suffer from collective action problems without coordination on policy objectives. Residents in all of the states on the PJM grid are suffering from the effects of the data center boom on their utility bills. This is an opportunity for Governor Sherrill to show real leadership by coordinating action among political leaders in these states and pushing for pro-consumer regulation of PJM across the grid.
This is the part that's on you. New Jersey has a single year — the clock runs to July 2027 — before the Board of Public Utilities locks in the rules that will decide whether our shiny new utilities laws protect ratepayers or just looks the part. The best places for you to make your voice heard are through the open comment period and by contacting your legislators. Tell your State Senator and Assembly members you want the BPU's data-center tariff opened up, the grandfather clause tightened, and A1208/S728 and A2398/S1818 placed on Governor Sherrill’s desk. The data centers and their corporate lobbyists won't ease off. Neither should we.
PDF Version: https://www.antimonopolynj.org/s/NJAC-Data-Centers-July-2026.pdf
[1] New Jersey Policy Perspective. AI Data Centers Drive 20% Electric Bill Spike, Cost New Jersey Families Billions. https://www.njpp.org/media/press-release/ai-data-centers-drive-20-electric-bill-spike-cost-new-jersey-families-billions/
[2] Congressional Research Service. Data Centers and Their Energy Consumption: Frequently Asked Questions (R48646). Library of Congress, https://www.congress.gov/crs-product/R48646
[3] Institute for Energy Economics and Financial Analysis (IEEFA), “Projected data center growth spurs PJM capacity prices by factor of 10,” (n.d.), https://ieefa.org/resources/projected-data-center-growth-spurs-pjm-capacity-prices-factor-10
[4] New Jersey Policy Perspective, “AI Data Centers”
[5] Rutgers New Jersey State Policy Lab, “Are Data Centers Raising Your Electric Bill? Mostly Not. Yet.,” (n.d.), https://policylab.rutgers.edu/publication/are-data-centers-raising-your-electric-bill-mostly-not-yet/
[6] Congressional Research Service, “Data Centers”
[7] "Large load tariffs proliferate as states take more active role in data center regulation." Utility Dive, https://www.utilitydive.com/news/large-load-tariffs-proliferate-as-states-take-more-active-role-in-data-cent/816184/
[8] Utility Dive, “Data centers”
[9] Public Utilities Commission of Ohio. PUCO Orders AEP Ohio to Create Data Center Specific Tariff. 2025-07-09. https://puco.ohio.gov/news/puco-orders-aep-ohio-to-create-data-center-specific-tariff
[10] American Action Forum. Virginia's New Data Center Electricity Rate Class. https://www.americanactionforum.org/insight/virginias-new-data-center-electricity-rate-class/
[11] Virginia State Corporation Commission. SCC Data Center Initiatives — Ensuring Data Centers Pay Their Own Costs. 2026-02. https://www.scc.virginia.gov/media/sccvirginiagov-home/about-the-scc/fact-sheets/scc-data-center-initiatives-02-2026.pdf
[12] "New Jersey Gov. Sherrill wants data centers to pay for their own electricity." WHYY, https://whyy.org/articles/new-jersey-data-centers-mikie-sherrill/
[13] Office of Governor Mikie Sherrill, New Jersey Governor's Office, “Governor Sherrill Announces Ratepayer Relief, Signs Major Legislation on Energy, Saving New Jerseyans $1B Annually,” (2026-07-07), https://www.nj.gov/governor/news/2026/approved/20260707a.shtml
[14] Stacy Mitchell and John Farrell. The Policies Communities Need to Meet the AI Moment. Institute for Local Self-Reliance, 2026-05-19. https://ilsr.org/articles/the-policies-communities-need-to-meet-the-ai-moment/
[15] Brookings Institution. The pledge to protect ratepayers from AI data center costs needs enforcement. https://www.brookings.edu/articles/the-pledge-to-protect-ratepayers-from-ai-data-center-costs-needs-enforcement/
[16] Institute for Local Self-Reliance, “The Policies Communities Need”
