In New Jersey lawmakers’ latest bid to control rising electricity prices, committees in both legislative chambers approved a bill that would require large power users to pay for a larger share of the infrastructure needed to deliver them electricity.
The bill, which passed Assembly and Senate committees in unanimous votes on Thursday, would require regulators to hold customers using at least 100 megawatts of power a month responsible for no less than 85% of their service costs in a bid to stop infrastructure spending from boosting residential ratepayers’ bills.
It is legislators’ newest attempt to tackle rising electric rates that they say are caused in part by data centers’ mammoth power needs.
Gov. Sherrill orders credits to offset electricity hikes coming in June
“We all know data centers are a need, and everybody here and everybody outside of here is looking for that information they can get in a nanosecond on their phone. That’s the future, and it’s not going to end,” said Assemblyman Rob Karabinchak (D-Middlesex). “Data centers are going to be a part of our future, and we are going to deal with it, but this bill is strictly for protecting our ratepayers.”
The legislation is meant to control transmission and other costs stemming from the infrastructure connecting large electricity users to the grid used by New Jersey and 12 other states.
Though they cannot profit off the sale of electricity itself, New Jersey’s regulated utilities—companies like PSE&G and Jersey Central Power and Light — are permitted to recoup infrastructure costs at a markup.
At present, those costs are placed on ratepayer bills across a utility provider’s service area regardless of who the project served.
Though the measure is likely to boost costs for data centers and other large power users, its sponsor insisted the bill is not meant to keep data centers out of New Jersey.
“We want to be married to data centers,” said bill sponsor Assemblyman Dave Bailey (D-Salem). “We want them to come here. We want to have that relationship, but we need a prenup.”
A January report by the market monitor for PJM Interconnection, which operates the multi-state grid used by New Jersey, found transmission costs accounted for 22% of wholesale power costs in 2025, down from 32% in 2024 despite increasing year-over-year. The cost of electricity rose by $14.4 billion (51%), and capacity prices, which are paid as the grid’s load approaches peak capacity, rose 262% to $10.6 billion.
Those price rises are driven by data centers’ energy needs. An Amazon data center proposed across the Delaware River from Trenton in Falls Township, Pennsylvania, could require twice as much power as Hamilton, the ninth-most populous municipality in New Jersey, said Assemblyman Wayne DeAngelo (D-Mercer), who chairs the Assembly Telecommunications and Utilities Committee.
Lawmakers approved a substantially similar bill at the end of the legislative session that concluded in January, but it did not become law because former Gov. Phil Murphy did not sign it before leaving office.
The bill approved Thursday won more bipartisan support than the version passed in the prior session. Assemblyman Paul Kanitra (R-Ocean) abstained during a vote last June but voted in its favor Thursday. Assemblyman Alex Sauickie (R-Ocean) voted against the previous measure but abstained Thursday.
“I think you legitimately want to help ratepayers with this bill. I believe that, and I think there are pieces of this bill that could in fact do that,” Sauickie told Bailey. “My concern with this bill is it simultaneously, in my opinion, hurts businesses and jobs.”
Data centers are going to be a part of our future, and we are going to deal with it, but this bill is strictly for protecting our ratepayers.
– Assemblyman Rob Karabinchak
The bill would likely boost transmission costs for customers that use large amounts of electricity — known in the industry as large load users — and could make data centers in New Jersey more expensive to operate.
Rate Counsel Brian Lipman, whose office advocates on behalf of ratepayers on utility matters, said he is generally supportive of the measure and believes it would reduce data centers’ impact on electricity bills.
But he warned that upsetting existing utility agreements with large load users could actually boost costs for residential accounts in some cases.
“With the risk of boring everyone, there are rate design issues that could be implicated,” Lipman told the Assembly panel. “Right now, cost allocation is done in a base rate case, and some of those large loads have been allocated certain amounts. If we pull them out of that and allocate them somewhere else, there is a possibility that residential customers could see an increase.”
YOU MAKE OUR WORK POSSIBLE.
