The New Jersey Senate has advanced a bill that would create new tariff classes for “large load” data centers in an effort to protect ratepayers in the state from cost increases.

The bill, cosponsored by ten Democrat lawmakers, would require public electrical utilities in the state to submit proposed tariffs to the state Board of Public Utilities and incentivize data centers to increase energy efficiency through the adoption of technologies that capture and reuse heat they generate.

The bill would target large load users with capacities exceeding 100MW monthly and would be charged under the new rules one year after the bill is enacted.

“It’s become very clear to us, because we’ve done hearings on the PJM grid - and how their auction process has gotten skewed by these data centers, whether they're coming or just proposed - [that they are] then reserving power for [data centers],” said state Senator John Burzichelli, a Gloucester County Democrat and one of the bill's sponsors.

While generally supported within the legislature, some dissenting voices have emerged pillorying the proposed bill. For example, Senator Declan O’Scanlon (Republican - Monmouth) asserted that the bill was a “shell game” and would still likely result in ratepayers being stuck with higher bills.

“This is really just a transfer of cost. These operators and data centers, their percentage of profit — if they want to make it, they’re going to make it. If we charge them more to take electricity costs and dump it on them, they’re just going to charge it back to keep their profit,” O’Scanlon said. “It’s going to come right back to the end users to be paid through our phones, our data plans, etcetera.”

The bill was originally proposed in June of last year by Democratic Assemblymen Dave Bailey and Joe Danielsen. The New Jersey Assembly subsequently passed the bill in the same month, and it was passed by the New Jersey Senate on Monday (January 12). The bill has now been sent to the New Jersey Governor's desk for approval; however, with Governor Phil Murphy leaving office on January 20, it is unclear whether he will sign it into law.

New Jersey is one of several states to propose new tariffs targeting large data centers. Just last week, lawmakers in Wisconsin introduced a bill aiming to protect ratepayers from cost increases tied to data center expansion.

Ohio was one of the first states to pass legislation to this effect, with Public Utilities Commission of Ohio (PUCO) approving a new rate class in July that requires new data center customers in Ohio to pay for a portion of their energy requests, even if they use less, to cover the cost of the infrastructure required to bring electricity to those facilities.

Before this, in April, the Oregon House of Representatives passed a bill that granted regulators the authority to consider which customers are the primary beneficiaries of new infrastructure and allocate costs accordingly.

Following this, in September, Virginia’s main utility Dominion Energy proposed a new rate class for data centers, applying to utility customers who consume more than 25MW of energy and have a monthly load factor of more than 75 percent. If passed, it would require many, if not most, of the states' approximately 450 data centers within its coverage zone to be classified in the new customer class.