New Jersey Lawmakers Pass Data Center Tariff Bill
- On Tuesday, New Jersey lawmakers approved a bill directing the state’s Board of Public Utilities (BPU) to create tariff standards for data centers that are rated at 50 MW or larger. This move is intended to protect other customers from the costs tied to connecting large energy loads to the grid.
- The proposed legislation is now with Democratic Governor Mikie Sherrill, who has highlighted energy affordability as a key issue. Her predecessor, Phil Murphy, previously pocket-vetoed a similar bill. Assemblyman David Bailey Jr., the bill’s sponsor, expressed hope that Sherrill’s involvement in the bill’s development will lead to her signing it into law.
- Bailey noted that this version of the bill is more comprehensive than the last one — it covers both new and existing facilities and lowers the eligibility threshold from 100 MW. He mentioned that utility companies have been supportive of this process.
Insights on the Bill
Bailey envisions this legislation as a guide for other states facing increasing power demands from data centers and the necessary grid improvements to keep up.
The new bill focuses specifically on data centers rather than all large loads, tasking the BPU with determining costs associated with these specific customers.
The definition of a “large data center” would include those sharing ownership or infrastructure, treating them as a single entity based on their peak energy demand.
Additionally, the bill calls for the development of energy efficiency programs and mandates performance reporting to the board while ensuring data centers have priority for curtailment during emergencies over residential customers.
Data centers will need to show their project is unique and can provide financial guarantees for 85% of the requested service for ten years, and those committing to renewable energy sources will be prioritized for interconnection.
Moreover, it grants the board the ability to implement additional rules to protect ratepayers, including transmission agreements and stipulations regarding energy facilities.
Advocates have praised the bill for taking a balanced approach to data center growth. Dawone Robinson from the Natural Resources Defense Council commented that this framework will provide cost savings for households and support New Jersey’s climate goals.