Jun 1, 2026
Utility bills have seen huge jumps across the country, and the rapid expansion of AI data centers is partly to blame.
One state is standing up to the hikes with protections aimed at stopping these energy guzzlers from driving up residents’ energy bills.
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New Jersey Gov. Mikie Sherrill has announced a statewide strategy to tackle the impact of data centers on energy demand, and hold owners accountable.
“By establishing these guardrails, we will hold data centers accountable, ensure they contribute their fair share, and make sure our communities not only benefit from the AI innovation happening in our state, but have a real hand in shaping it,” Sherrill said in a release.
Unaffordable energy bills
In 2025, electric and gas utilities requested nearly $31 billion in rate increases, which was more than double from 2024’s total of $15 billion, according to research by nonprofit PowerLines.
And U.S. Energy Information Administration data shows that residential rates grew an average of 10.2% in March compared to the year prior.
These increases have put pressure on American families, putting “many people in the impossible situation of deciding whether to pay to keep their lights on or to pay for other essentials like food, medicine and transportation,” according to Consumer Reports.
AI data centers are one reason for the increases, along with rising fuel prices, and the cost to upgrade aging electrical grids, or to make them more resilient in the face of weather events, the publication reported.
New Jersey’s plan is a direct response to this. The governor said that electricity prices in the region saw an increase of roughly 20% last summer alone, according to a report from NBC 4 New York.
NBC 4 reported that environmental groups were backing the governor’s proposed strategy, “warning that data centers could strain water supplies and increase pollution without stronger oversight.”
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States that are home to many data centers, such as Texas, Arizona, and Louisiana have faced water issues, as have residents in Georgia living next to a massive Meta data center.
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New Jersey’s plan
Gov. Sherrill told NBC 4 that PJM, the largest grid operator in the U.S., which serves multiple states, including New Jersey, reported that data centers “accounted for 70% of projected demand growth last year.”
Sherrill’s plan to address data center growth has four pillars. The first will require that they pay their fair share when it comes to demands they make on the grid. They will have to “bring new clean energy online and contribute to the grid infrastructure needed to support their growth, shifting costs away from residents and ratepayers.”
The second pillar mandates that there be transparency with regard to what exactly those demands will be. Data center companies often won’t disclose how much water they use, according to a report from the New York Times. New Jersey’s plan will require “reporting on energy and water use so the public has greater visibility into the impact of large-scale facilities.”
New Jersey will also develop statewide standards for Community Benefits Agreements, legal agreements between developers and municipalities, so that data center developers “address impacts like light, noise and pollution while making meaningful local investments.”
Lastly, the plan will focus on job creation, so that data centers use local tradespeople and “pay prevailing wages.”
State officials told NBC 4 that New Jersey’s plan was the first in the country to offer a “comprehensive statewide framework to regulate data center growth.”
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Rebecca Payne has more than a decade of experience editing and producing both local and national daily newspapers. She's worked on the Toronto Star, the Globe and Mail, Metro, Canada's National Observer, the Virginian-Pilot and Daily Press.
