New Jersey lawmakers on June 30, 2026, passed a bill requiring the state's Board of Public Utilities to create tariff standards for all data centers of at least 50 MW, with the goal of protecting other electricity customers from costs tied to the AI boom. The bill now heads to Democratic Gov. Mikie Sherrill, who has made energy affordability a central priority. Her predecessor, Phil Murphy, pocket-vetoed a similar bill earlier this year by not signing it before his term ended.
The bill applies to both new and existing data centers and charges the Board of Public Utilities with deciding which grid connection costs should be attributed to those customers. It lowered the eligibility threshold from 100 MW in the previous version and now covers existing facilities, not just new ones. The legislation requires prospective data centers to prove their project is unique and not duplicative, and they must provide financial guarantees that they'll take or pay for at least 85% of the service they request for 10 years. The board will prioritize the interconnection of data centers that make binding commitments to bring their own clean generation or energy storage. During system emergencies, large data center customers will face priority curtailment before residential customers.
The bill's sponsor, Assemblyman David Bailey Jr., D, said Sherrill's office was involved in shaping the latest version and he's optimistic she'll sign it. "We really did not get much, if any, pushback from the utilities," Bailey told Utility Dive. According to Bailey, the new bill is more protective than the previous one. The bill was praised by advocates, with Dawone Robinson, a managing director at the Natural Resources Defense Council, saying it takes a "balanced path forward for data center growth."
Bailey said he hopes the bill can serve as a blueprint for other states as parts of the country struggle to respond to skyrocketing demand for power from data centers and the grid investments needed to meet that demand. The bill gives the Board of Public Utilities authority to implement other provisions it deems necessary to protect ratepayers, including transmission security agreements and other stipulations related to generation, distribution, or substation facilities. It also requires the development of demand-response and efficiency programs, as well as mandating flexibility commitments with requirements to report flexibility performance to the board. Robinson noted the framework "will deliver cost savings to households faster and more effectively" and ensures any capacity framework adopted by PJM Interconnection will support New Jersey's climate targets. With utilities reportedly receptive to the process and the governor's office involved in drafting, the bill appears positioned to become law and potentially influence how other states handle the collision between AI-driven electricity demand and ratepayer protection.