Gov. Phil Murphy discusses clean energy efforts in New Jersey during his 2026 state budget address.
Three bills that deal with the impact of AI data centers on New Jersey's energy grid cleared different committees in the state Senate on Thursday morning.
This legislation advanced weeks before Garden State residents are set to see a spike in their energy bills. The state's utility rates are expected to rise by as much as $20 each month -- or about 17% to 20% -- because electricity auction prices were higher as a result of greater demand and lower supply.
These rate hikes were approved by the state Board of Public Utilities in February.
What does the legislation do?
The first bill, sponsored by state Sens. John Burzichelli and Linda Greenstein, moved unanimously through the upper chamber's economic growth committee.
It requires the state's Board of Public Utilities to conduct a study on the effects of data centers on utility use and expenses.
Alex Ambrose of New Jersey Policy Perspective testified in support of the bill and called it "essential."
"At a time when affordability is out of reach for so many people in New Jersey, I appreciate that the state is taking action to address the root cause of these issues," she said. "It's concerning that residential ratepayers like you and I are bearing the brunt of costs for these data centers."
The bill would require the study to determine if ratepayers are incurring unreasonable increases to support new transmission, distribution or generation facilities for the centers and calculate the portion of rates attributable to the demands of data facilities.
"New Jersey is experiencing its own expansion in data centers with the growth of AI-focused computer companies," Greenstein said. "This concentrated growth has implications for the regional grid, including an impact on the supply of energy and consumer costs. We need to make sure these centers are paying their fair share and that the costs aren't falling on non-data center customers."
The bill passed the Assembly and now needs to pass the full state senate before heading to the governor's desk for consideration.
The second bill, sponsored by Senator Majority Leader Teresa Ruiz and state Sen. Renee Burgess, cleared the state Senate Environment and Energy Committee with only state Sen. Parker Space voting against it.
The legislation would require quarterly reports from owners or operators of data centers to prepare and submit a water and energy usage report to the Board of Public Utilities including basic information relating to the data center, their energy and water usage, performance indicators and water usage effectiveness.
The report would then be published by the BPU online.
Ruiz noted in a statement that "data centers consume an extraordinary amount of energy and water, using as much in a single day as hundreds of homes.
"As their growth continues to surge, we must be diligent in assessing their environmental footprint and economic impact," she said. Requiring reporting on the water and energy consumption of these facilities will increase oversight, accountability, and give us the data necessary to create equitable policies that protect consumers and our environment."
The third bill also cleared the state Senate's environment and energy committee with only Space opposed.
Sponsored by Burzichelli, the bill is "absolutely a response" to what committee chair state Sen. Bob Smith called a "corrupt action by PJM" at the capacity auction.
It would require each electric public utility in the state to develop and submit to the BPU a tariff for data centers. The tariff would have to be designed to ensure that non-data center ratepayers are protected from any increased costs that result from increased electricity demand caused by data centers as well as incentivize data centers to develop and utilize methods to increase energy efficiency.
Dan Lockwood of PJM said the capacity market was approved by the Federal Energy Regulatory Commission and the rules for the auction were "found to be just and reasonable."
"The higher capacity pricing resulting from last summer's auction signaled the tightening of electricity supply and demand across the PJM region," he said.
Burzichelli said "putting a tariff system in place will prepare us with a means to have these centers pay their fair share and offset any extra costs that get imposed on residents.
"We want to make sure that the high expenses of these energy consuming centers aren't falling onto the backs of everyday consumers," he said. "The tariffs would also provide an incentive for the centers to adopt practices that are more energy efficient and less costly."
AI stretches NJ's electricity supply
At a state Senate Legislative Oversight Committee meeting in March, state Sen. Andrew Zwicker, that committee's chair, put the energy usage of data centers into perspective by saying they already use 2% of the energy globally.
"The environmental impact of AI is remarkable," he said. "Training a single large language model like OpenAI's ChatGPT consumes approximately 1,300 megawatt hours of electricity, the same amount used by 130 U.S. homes in a year."