A new report from New Jersey Policy Perspective is raising alarms about the growing impact of artificial intelligence data centers on the state’s electric grid and utility bills, as lawmakers in Trenton advance legislation aimed at protecting ratepayers and managing future energy demand.
The report, “Fool’s Gold: The Hidden Costs of AI Data Centers for New Jersey,” argues that the rapid expansion of data centers is already contributing to higher electricity costs and could significantly reshape the state’s energy landscape in the coming years.
At the same time, multiple bills moving through the New Jersey Legislature seek to ensure that large-scale energy users pay their share of infrastructure costs and rely more heavily on clean energy sources.
Report points to rising demand, higher costs
According to New Jersey Policy Perspective (NJPP), data centers were a major driver behind a roughly 20 percent increase in electric bills experienced by New Jersey residents in June 2025. The report cites regional grid data showing that large-load users — particularly AI-driven facilities — accounted for the majority of increased demand during recent capacity auctions.
The report estimates that by 2030, data centers could consume nearly 10 percent of New Jersey’s total electricity usage — roughly equivalent to powering the entire state of Rhode Island.
NJPP also highlights the scale of individual facilities, noting that a single large data center can use as much energy as 100,000 households.
Beyond cost impacts, the report raises concerns about environmental and infrastructure pressures, including increased reliance on fossil fuel power plants, added strain on water resources, and the concentration of pollution near environmental justice communities.
The report also questions the long-term economic benefits of data center development, pointing to relatively low permanent job creation compared to other types of industrial development, even as projects receive significant state subsidies.
Lawmakers move to protect ratepayers
As concerns about rising energy demand grow, lawmakers are advancing legislation designed to prevent households and small businesses from subsidizing the cost of powering large data centers.
One bill, A796 — which has passed the New Jersey General Assembly — would require electric utilities to establish specific rules for large-load customers, including data centers, to ensure that existing ratepayers are not burdened with increased transmission and distribution costs.
The legislation would also allow the New Jersey Board of Public Utilities to require financial guarantees from large energy users, ensuring they pay for at least 85 percent of the service they request over a minimum of 10 years. The bill applies to facilities with peak electricity demand of 100 megawatts or more.
Supporters say the measure is intended to create guardrails as demand grows.
“Data center growth will drive up the cost of electricity if we don’t create guardrails,” said Assemblyman Dave Bailey Jr., one of the bill’s sponsors, in a statement. “We want to make sure data centers pay for the energy they use and the infrastructure they need, not our constituents.”
Other sponsors echoed that concern, emphasizing that innovation should not come at the expense of affordability for residents and small businesses.
A parallel push for clean energy requirements
A second set of proposals moving through the Legislature focuses on how data centers source their energy — and whether they should be required to rely on new, cleaner generation.
Legislation advanced by the Senate Environment and Energy Committee would require new AI data centers and cryptocurrency mining facilities to obtain their electricity from new Class I renewable energy sources, new nuclear generation, or a combination of both.
The bill would also require companies to submit detailed energy plans to the Board of Public Utilities outlining how they will meet those requirements and improve energy efficiency.
Lawmakers backing the measure say it is aimed at preventing additional strain on the regional grid while advancing the state’s clean energy goals.
“Although AI data centers have huge potential for our economy, they should not come at the expense of New Jersey residents and our environment,” said Sen. Bob Smith, chair of the Senate Environment and Energy Committee.
A related resolution urges other states within the PJM Interconnection — the regional grid operator serving New Jersey and surrounding states — to adopt similar standards, reflecting the broader, multi-state nature of energy demand.
“While we work to address rising energy costs in the short term, we need to take a longer-term, regional perspective when it comes to ensuring that demand from new sources like data centers does not disproportionately harm average families,”said Sen. Linda Greenstein.
A growing issue with regional implications
The debate unfolding in New Jersey reflects a broader national and global trend, as the rapid growth of artificial intelligence drives demand for data storage, computing power, and energy.
Because New Jersey is part of the PJM regional grid, increases in demand are not confined to a single state, complicating efforts to manage costs and infrastructure impacts.
NJPP’s report frames the issue as an urgent policy challenge, while lawmakers appear to be responding with a mix of consumer protections and long-term planning measures.
As both the industry and legislative response continue to evolve, the central question remains how to balance technological growth with affordability, environmental protection, and grid reliability.
