New Jersey creates separate electricity rate class for large AI data centers

New Jersey Governor Mikie Sherrill signed the Data Center Fair Share Act on July 7, 2026, creating a separate electricity-ratepayer class that requires large data centers to cover their own energy and grid costs.

The law (S731/A796) applies to data centers drawing 100 megawatts or more per month — the scale of large AI training and inference sites — and bars utilities from spreading those costs to residential and small-business customers. New large data-center customers must guarantee payment for at least 85% of the electricity they request under a 10-year contract, and face curtailment ahead of households during grid emergencies.

The move responds to a surge in electricity demand from AI computing that officials in several states blame for rising household bills. Sherrill signed it alongside two other energy bills: one repealing a utility return-on-equity adder (S1673/A2757) and the Advanced Grid Technologies Act (S4411/A5188), which tightens oversight of utility infrastructure spending.

The administration says the three measures together will save New Jersey ratepayers more than $1 billion a year, citing an analysis by Synapse Energy Economics, and pairs them with a $25 bill credit to all 3.6 million ratepayers plus an additional $150 credit for lower- and moderate-income households, according to the governor’s office.

The $1 billion savings figure comes from a consultant hired by the state and covers the combined bills, not the data-center provision alone. Whether the cost wall holds depends on how the Board of Public Utilities writes the implementing rules, and whether developers route projects to neighboring states instead.