TRENTON – The Senate Environment and Energy Committee advanced legislation sponsored by Senators Bob Smith and John McKeon as well as a resolution sponsored by Senators Bob Smith and Linda Greenstein to address the rising demand in electricity stemming from artificial intelligence (AI) data centers.
During testimony to the Senate Legislative Oversight Committee in early March, the electric utility PSE&G noted that interconnection inquiries received from data centers rose over the last year from 400 MW to 4,700 MW, a more than tenfold increase. Moreover, PJM, the operator of the regional electrical transmission grind in New Jersey, forecasts a major increase in demand for electricity over the next several years with a substantial portion of that increase attributed to new data centers.
“Rising demand for electricity coupled with interconnection delays causing stagnant supply is causing prices to rise, impacting businesses and families that are already struggling due to rising costs and economic uncertainty,” said Senator Smith (D-Middlesex), Chair of the Senate Environment and Energy Committee. “If these data centers source their own clean energy, we can prevent rising costs for consumers while achieving our clean energy goals.”
“New Jersey residents are already about to face increases to their energy bills, and with exploding demand for new data center development those increases are at risk of worsening,” said Senator McKeon (D-Essex/Passaic). “Requiring data centers to source their own clean energy will help keep electricity demand, and thus prices, more stable while simultaneously ensuring that communities do not face more pollution.”
“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 Senator Greenstein (D-Middlesex/Mercer). “If we as a region act to require data centers to source their own energy, we can protect consumers from rising costs and promote clean energy without sacrificing the economic potential that AI and data centers can bring.”
The legislation, S-4143, would require that new AI data centers source all of their electricity demand from new, clean energy sources as well as submit an energy usage plan to the Board of Public Utilities (BPU). The energy usage plan would certify how the data center sourcing their energy from new, clean sources as well as how they are optimizing the facility for energy efficiency.
In consideration of the fact that rising energy demand is a result of rising demand across the PJM region, the bill’s requirements would not take effect until the majority of other states in the PJM region adopt similar requirements. This would safeguard New Jersey against potential losses in economic development opportunities and ensure that the measures result in a decrease in the regional demand driving up energy costs. Given that the requirements of the legislation are contingent upon a majority of states in the PJM region adopting similar requirements, SR-125 urges states within that region to adopt those measures.