New Jersey Senate Approves Bill for New Utility Rate Class Targeting Large Data Centers

New Jersey Senate Approves Bill for New Utility Rate Class Targeting Large Data Centers January 13, 2026 The New Jersey Senate has passed legislation aimed at shielding residential and small business ratepayers from the rising electricity costs associated with the rapid expansion of power-intensive data centers. This move reflects a growing national trend where states are grappling with how to manage the substantial grid infrastructure demands of the digital economy without burdening traditional consumers. The bill, which advanced on January 12 and now awaits the governor's signature, would establish a new tariff class for "large load" customers, specifically targeting data centers and similar facilities with a monthly capacity exceeding 100 megawatts. Sponsored by ten Democratic lawmakers, the legislation mandates that the state's public electrical utilities submit proposed rate structures for these large users to the New Jersey Board of Public Utilities for approval. It also includes provisions to incentivize energy efficiency, such as the adoption of waste heat capture and reuse technologies. State Senator John Burzichelli, a Gloucester County Democrat and co-sponsor, explained the rationale behind the bill, stating, “It’s become very clear to us... that [data centers are] reserving power, whether they're coming or just proposed,” which skews the regional PJM grid's auction process. The new rules would take effect one year after the bill is enacted into law. However, the proposal has faced criticism. Republican Senator Declan O’Scanlon argued the measure is a “shell game” that would ultimately not protect consumers. “This is really just a transfer of cost... If we charge them more... they’re just going to charge it back to keep their profit,” O’Scanlon said, suggesting costs would be passed on to end-users through higher service fees. New Jersey joins several other states in this regulatory push. Recently, Wisconsin lawmakers introduced a similar bill. Ohio's Public Utilities Commission approved a new rate class in July requiring new data center customers to pay for a portion of their requested power capacity upfront. Similarly, Oregon passed a bill in April granting regulators authority to allocate infrastructure costs to primary beneficiaries, and Virginia's Dominion Energy proposed a new class in September for customers using over 25MW. The New Jersey bill's fate is uncertain as it reaches Governor Phil Murphy's desk just days before he leaves office on January 20. Source: datacenterdynamics