NJ Electric Costs Will Rise Again, New Report Says

New Jersey residents have been battling ever-increasing electric bills for the past few years with no end in sight. And despite government intervention, the trend might continue.

It's news that won't sit well as thousands continue to wait for electric service to be restored after July 4th weekend storms left them without air conditioning and ruined food purchased for holiday picnics.

Behind the spike in costs sits a surge in demand from data centers powering artificial intelligence, according to a new policy report and state consumer advocates.

The facilities, often out of public view, consume massive amounts of electricity and water while delivering limited long-term employment, researchers found.

“Demand for electricity has increased significantly due to the influx of data centers and artificial intelligence,” said Brian Lipman, director of the state’s Division of Rate Counsel. “Both use a lot of electricity, which has resulted in major increases in demand.”

That demand will help drive a 20 percent jump in electric bills, according to the New Jersey Policy Perspective report. The increase follows years of relatively flat usage, leaving the region without enough generation to meet new forecasts.

The strain shows up not just in monthly bills, but across the state’s infrastructure.

A single large data center can use as much electricity as 100,000 households. Some facilities under construction nationwide could demand far more.

This need for power, in part, is what drove Governor Mikie Sherrill to remove a decades old ban on nuclear power plants.

By 2030, data centers could consume nearly 10 percent of New Jersey’s total electricity, roughly equal to the annual usage of an entire small state.

Utilities pass those costs through the system.

“Because of this supply and demand dynamic, prices have risen,” Lipman said.

Natural gas prices compounded the increase after a cold winter drove up heating demand and depleted reserves. Higher usage combined with higher rates pushed bills further upward.

Lipman added that global instability, including conflict affecting energy supply, could continue to influence prices.

For many households, the impact has been immediate.

“We have seen a marked increase in customer complaints about their bills,” Lipman said. “The concern is that there are people who will be unable to afford their bills.”

Some residents now face trade-offs.

“They will be in the position of choosing between utilities, food, medicine and other necessities,” he said.

Data centers require more than electricity.

Cooling systems consume large volumes of water, with a single mid-sized facility using more than 100 million gallons annually.

Nationwide, large AI-focused data centers used about 14 billion gallons of water in 2024, a figure expected to rise.

Much of that usage remains difficult to track. Companies are not required to publicly disclose detailed energy or water consumption, limiting oversight for regulators and communities.

Developers often cluster facilities in areas with existing infrastructure, which can intensify local strain. In other parts of the country, dense concentrations of data centers have appeared near residential neighborhoods, schools and retirement communities.

New Jersey has more than 48 existing data centers, with a dozen more planned or under construction.

Despite the scale, long-term job creation remains limited. A typical 250,000-square-foot data center may employ about 50 workers once operational. By comparison, warehouses and office buildings support far more jobs per square foot.

The economic trade-offs extend to state finances.

New Jersey offers tax incentives for AI-related development, including potential credits reaching hundreds of millions of dollars. Other states have already seen significant revenue losses tied to similar programs, with some scaling them back.

Meanwhile, the energy burden continues to shift toward ratepayers.

“Ratepayers are essentially subsidizing big tech companies’ data center projects through higher electricity bills,” the report found.

Infrastructure upgrades required to support new facilities, including transmission lines and grid enhancements, add further costs. If a project shuts down, those expenses can remain with customers.

State officials and regulators are now weighing how to respond.

“We are working with the regional grid operator to make sure that data centers and other large users pay their fair share for electric generation,” Lipman said. “This should drive down costs.”

His office also challenges utility rate increases, reviews filings and negotiates to limit how much companies can pass on to customers. If negotiations fail, cases move to administrative court.

At the same time, advocates push for broader policy changes, including new rate structures for large energy users, stricter reporting requirements and limits on subsidies.

Without changes, demand projections continue to rise sharply. Forecasts for electricity needs through 2030 have climbed to levels six times higher than estimates from just a few years ago, driven largely by data centers.

That uncertainty complicates planning.

Overestimating demand can lead to unnecessary infrastructure spending and higher costs, while underestimating it risks reliability issues, including potential blackouts during extreme weather, the report found.

For residents already struggling with rising bills, the stakes remain immediate.

“The biggest concern is that people put themselves in unsafe positions because they cannot afford their bills,” Lipman said. “There are people who have never needed help before and they do not know what to do,” he said.

State officials encourage customers facing difficulty to contact their utility providers or seek assistance through statewide support services.