New Jersey Enacts Legislation to Lower Utility Bills and Reform Data Center Electricity Costs

New Jersey Governor Mikie Sherrill on July 7 signed three legislative measures aimed at lowering electricity costs by eliminating an added transmission incentive for utilities, strengthening oversight of utility infrastructure investments, and requiring large data centers to bear a greater share of electricity and grid costs. The legislation, together with energy affordability initiatives advanced during the administration’s first six months, is projected to save ratepayers more than $1 billion annually.

The package removes a transmission incentive that allowed utilities to earn an additional return on equity for participating in the regional grid operator, with those costs ultimately recovered through customer rates. It also requires utilities to obtain state approval before undertaking supplemental transmission projects, while providing an expedited review process for projects using advanced transmission technologies. In addition, the legislation establishes a separate electricity rate class for large data centers, requiring them to pay for the infrastructure needed to serve their operations instead of shifting costs to residential and small business customers. The measure also encourages new clean generation and demand reductions during periods of grid stress while creating a mechanism for large customers to fund distributed energy resources that offset electricity demand.

Separately, Governor Sherrill announced immediate customer relief through a $25 Residential Universal Bill Credit for all 3.6 million New Jersey electricity customer accounts and an additional $150 Residential Energy Assistance Payment for eligible low- and moderate-income households. Governor Sherrill also highlighted recent actions by the Board of Public Utilities, including renewal of the Summer Termination Program to protect vulnerable customers from utility disconnections during extreme heat and approval of 12 solar projects capable of powering about 45,000 homes.

The legislation advances the administration’s broader energy affordability strategy introduced earlier this year. Recent initiatives include executive orders freezing electric rate increases and accelerating new generation, support for reforms to the regional capacity market, lifting the state’s long-standing restrictions on new nuclear development and establishing a Nuclear Task Force, expanding the Community Solar Energy Program to support up to 3,000-megawatt of additional solar capacity, approving new solar and battery storage projects, awarding $79 million for large-scale clean energy investments, and introducing a statewide framework for data center development while supporting artificial intelligence-related economic growth.