Assemblyman Dave Bailey, Jr.’s legislation designed to ensure that public utility customers are not burdened with subsidizing the energy costs of large data centers was signed into law on Tuesday. Governor Sherrill signed the bill at Assemblyman Bailey’s childhood home in Salem County, where his mother, Eileen, still resides. Assembly members Joe Danielsen, Clinton Calabrese and Eliana Pintor Marin also sponsored Bill A796.
“Data center growth will drive up the cost of electricity if we don’t create guardrails,” said Assemblyman Bailey (D-Gloucester, Salem, Cumberland). “We want to make sure data centers pay for the energy they use and the infrastructure they need, not our constituents. This bill is about protecting ratepayers and preventing households and small businesses from paying for data centers to connect to the grid.”
Bill A796 requires the Board of Public Utilities to develop special electric service rules for large data centers to protect non-data center customers from increased transmission and distribution costs. Electric public utilities will have 180 days after the rules are developed to apply them to all new and existing data centers that have a peak electricity demand of 50 megawatts (MW) or more, or a lower threshold that the BPU deems necessary.
The interconnection rules established by the law require financial guarantees to ensure that large data center customers pay for at least 85 percent of the service they request for a minimum of 10 years, and require upfront deposits to cover the costs of building new transmission. The law also incentivizes data centers to invest in new generation and develop and utilize energy efficiency measures to offset their demand and reduce strain on the grid.
Bailey noted that he was grateful the Governor chose to sign the bill at his mother’s home.
“My 90-year-old mother asks me to come over when she opens her electricity bill each month to see how good of a job I am doing in Trenton,” said Assemblyman Bailey. “I’ve told that story a number of times to show how rising energy costs affect everyone in New Jersey, and that I take my promise to lower those costs seriously. It’s really special that Governor Sherrill is signing my legislation tackling energy prices at the same table where my mom and I sit to look at her electricity bill.”