New Jersey lawmaker proposes surcharge on data centers using a lot of electricity

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With demand for electricity increasing in New Jersey and utility bills spiking 20% in June, South Jersey Assemblywoman Andrea Katz is introducing a measure to impose a surcharge on data centers that consume a significant amount of electricity during peak hours.

“They’re not going to want to pay those dollars, right, they’re going to want to be more efficient and they’re not going to want to use energy at those peak hours because they won’t want to pay that surcharge,” Katz said.

The cost of electricity has become a front-burner issue in New Jersey.

Democratic gubernatorial candidate Mikie Sherrill promised to declare a state of emergency and freeze utility rates if she wins the election. Republican Jack Ciattarelli said the way to lower utility bills is for New Jersey to pull out of the Regional Greenhouse Gas Initiative, and he’s vowed to issue an executive order to do that if elected governor.

A growing number of Garden State tech and financial companies using artificial intelligence in their operation rely on data centers, large networks of computers, which require high amounts of electricity.

Katz said this is putting a strain on the region’s electrical grid run by PJM Interconnection. PJM directs the flow of electricity for 13 states, including New Jersey, in a territory that covers more than 67 million people.

“We need upgrades in it, we absolutely do, it’s not as efficient as it should be and the way the laws are written it falls onto the ratepayers right now to cover those costs,” she said.

New Jersey Gov. Phil Murphy and eight other governors have called for greater consumer representation at PJM in order to hold the line on electricity price increases. Murphy signed two bills this summer that he said will increase transparency around decisions made by PJM grid operators.

Katz said her proposed bill will be formally introduced next month when the legislature is back in session and the surcharge details are still being formulated.

“The public utilities will impose the surcharge, and that’s going to get approved by the BPU,” she said.

The New Jersey Board of Public Utilities is the state agency that oversees essential services like electricity. Part of the BPU’s job is to make sure that electrical power is reliable and affordable.

Katz said electricity demand will continue to rise in the future, which is why controls must be implemented now.

“I hope there is bipartisan support for this bill,” Katz said. “But the only people I listen to are my voters and they want this done, so I hope there is bipartisan support.”