New Jersey Lawmakers Advance Bill to Shift Power Infrastructure Costs to Data Centers

New Jersey legislators took steps Thursday to protect residential electricity customers from rising rates by advancing a bill that would require large power users like data centers to pay a bigger share of infrastructure costs.

Assembly and Senate committees unanimously approved the measure, which would require customers using at least 100 megawatts of power monthly to cover no less than 85% of their service costs, according to the bill’s provisions. The legislation aims to prevent infrastructure spending from driving up residential ratepayers’ bills.

“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,” 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 bill targets transmission and infrastructure costs for connecting large electricity users to the regional power grid that serves New Jersey and 12 other states. Currently, New Jersey’s regulated utilities like PSE&G and Jersey Central Power and Light can recoup infrastructure costs at a markup, with those expenses spread across all ratepayers in their service areas regardless of which customers the projects serve.

Data centers have emerged as a major driver of electricity demand and infrastructure costs. An Amazon data center proposed in Falls Township, Pennsylvania, across the Delaware River from Trenton, could require twice as much power as Hamilton, New Jersey’s ninth-most populous municipality, according to Assemblyman Wayne DeAngelo (D-Mercer), who chairs the Assembly Telecommunications and Utilities Committee.

A January report by the market monitor for PJM Interconnection, which operates the multi-state grid, found transmission costs accounted for 22% of wholesale power costs in 2025, down from 32% in 2024 despite year-over-year increases. The cost of electricity rose by $14.4 billion or 51%, while capacity prices jumped 262% to $10.6 billion, according to the report.

Bill sponsor Assemblyman Dave Bailey (D-Salem) emphasized that the measure is not intended to discourage data centers from locating in New Jersey. “We want to be married to data centers,” Bailey said. “We want them to come here. We want to have that relationship, but we need a prenup.”

The legislation gained broader bipartisan support compared to a similar bill passed at the end of the previous legislative session in January. That earlier version did not become law because former Gov. Phil Murphy did not sign it before leaving office.

Assemblyman Paul Kanitra (R-Ocean), who abstained from voting on the previous version last June, voted in favor Thursday. Assemblyman Alex Sauickie (R-Ocean) moved from opposing the earlier measure to abstaining 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.”

The bill represents lawmakers’ latest effort to address rising electricity rates that they attribute partly to data centers’ massive power requirements. While the measure would likely increase costs for data centers and other large power users, supporters argue it would provide necessary protection for residential customers facing mounting utility bills.

The legislation now moves forward in the legislative process as New Jersey continues balancing its growing technology sector with concerns about electricity affordability for residents.