New Jersey lawmakers OK plan to charge data centers for spiking electric costs
Illustration picture shows the outside of the brand new data center building the opening of a brand new data center in a sustainable building in Hoboken, New Jersey, on Monday, March 18, 2019 JASPER JACOBS/AFP via Getty Images
Data centers, which are driving higher electric costs in New Jersey, would face new tariffs under a plan legislators advanced Thursday.
This story was originally published by the New Jersey Monitor.
A Senate panel advanced legislation Thursday that would require electric companies to develop new tariffs to be levied on “large-load” data centers, with the goal of protecting New Jersey residents, businesses, and other regular ratepayers from increased costs driven by the power-hungry centers.
The bill would require public electric utilities to submit proposed tariffs to the state Board of Public Utilities and incentivize data centers to increase energy efficiency by adopting technologies that capture and use the heat they generate. Under the bill, energy users of more than 100 megawatts monthly would be charged the new tariffs beginning one year after the bill’s enactment.
The bill has 10 sponsors, all Democrats.
It passed along party lines in the Senate’s budget committee, despite debate among lawmakers and advocates about whether the measure would achieve its goal of insulating regular ratepayers from increased costs.
Alex Ambrose of progressive think tank New Jersey Policy Perspective urged legislators to pass the bill, reminding them that the Garden State’s utility rates are 20% higher than the national average and will continue to rise without action.
Artificial intelligence data centers already are straining the region’s power grid, and the situation could worsen, Ambrose said. PJM Interconnection — the region’s energy grid operator — could soon allow data centers to connect to the grid even if there’s not enough energy, she noted.
“That means that data centers may be prioritized over regular people,” Ambrose said. “It’s clear that PJM and the federal government aren’t going to help, so it’s time for the states to step up. We need guardrails to protect people from higher bills. This is one step in the right direction.”
But Sen. Declan O’Scanlon (R-Monmouth) called the plan “a shell game” in which ratepayers likely still will get stuck with higher bills. O’Scanlon, along with the committee’s three other Republican members, voted against the bill.
“This is really just a transfer of cost. These operators and data centers, their percentage of profit — if they want to make it, they’re going to make it. If we charge them more to take electricity costs and dump it on them, they’re just going to charge it back to keep their profit,” O’Scanlon said. “It’s going to come right back to the end users to be paid through our phones, our data plans, etcetera.”
Sen. John Burzichelli (D-Gloucester), a committee member and one of the bill’s prime sponsors, countered that data centers “are different, and they have to be treated differently.” PJM has reported that it expects energy demand in its 13-state service area to grow 32 gigawatts by 2030, with most — 30 gigawatts — coming from data centers.
Burzichelli and the panel’s eight other Democrats voted in favor of the bill.
The full Assembly passed the bill in June, and it’s expected to go before the full Senate for a vote Monday. It’s unclear whether Gov. Phil Murphy, a Democrat, would sign it. He leaves office on Jan. 20.
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