AI to blame for rising electric rates, report says

By: Katie Sobko
NorthJersey.com
USA Today Network - New Jersey

..... New Jersey ratepayers are well aware that utility costs continue to rise. Most households in the state experienced rate hikes of more they $20 per month in the summer of 2025 - and further hikes could still come.
..... But what's driving up costs?
..... According to a new report from New Jersey Policy Perspective, a left-leaning think tank, the bulk of the blame should fall on artificial intelligence data centers.
..... The report, written by analysts Alex ambrose and Peter Chen, contends that the "facilities sue large amounts of energy, do not deliver meaningful long-term benefits and cause the state to lose money from subsides and credits."
..... Ambrose and Chen says the state should be proactive to address "hidden risks" as a benefit to small businesses and residents throughout the state.
..... Data centers, the giant warehouses filled wit computers sued by AI platforms like OpenAI and ChatGPT, require a significant amount of electricity and water to cool them off.
..... For example, a medium-size data center can consume more than 100 million gallons of water per year, roughly as much as a small town, says the New Jersey Policy Perspective report.
..... The Garden State is home to 48 data centers, with a dozen more on the way, and projections indicate that nearly 10% of the state's electricity usage will be by data centers, in the next four years.

How can Trenton help NJ residents, businesses?

..... The report suggests a few ways lawmakers can protect residents and small business. Some are straightforward - such as creating a standard definition of what constitutes a data center, so it can be regulated - while others will take a bit more bandwidth, like implementing guardrails for data center companies.
..... Those guardrails would be for things such as cost sharing and transparency. the Legislature could pass a bill to required data center to pay more because they use more energy. they did it once, but former Governor Phil Murphy did not sign the bill.
..... It would have created a new rate for data centers, charging them more for their energy usages to help offset the increases in household and small-business energy bills.
..... The guardrails could also increase transparency by requiring data centers to report their energy and water usage or even mandating that data center companies bring their own energy generation.
..... The energy gird in New Jersey is regulated by PJM, the regional operator responsible for adding energy projects to the grid.
..... New Jersey is one of 13 states on the electricity grid operated by PJM Interconnection. It is responsible for energy for a huge swath of the mid-Altantic and Midwest regions, stretching form New Jersey to North Carolina and from the coast into Illinois, covering about 70 million residents within its service area.
..... The report suggests that the state take control by standardizing load forecasting instead of allowing large project to pitch in multiple jurisdictions, which would allow the Board of Public Utilities to work with PJM and utilities to reduce duplication of projects and ensure that load forecasting is as accurate as possible in New Jersey.
..... The last suggestion in the report is to remove or restrict data center subsidies. since the program is relatively new and hasn't issued any approved credits yet, there's time to reduce its cost before substantial revenue losses occur.
..... "The future of New Jersey's affordable clean energy, along with its economic and environmental well-being, hings on lawmakers prioritizing everyday New Jerseyans over for=profit technology companies," the report says. "the path forward is clear" stronger rules, cleaner energy and a commitment to putting people before corporate profits."

..... Katie Sobko covers the New Jersey Statehouse. email sobko@northjersey.com

HOME