Dive Brief:
- New Jersey lawmakers on Tuesday passed a bill requiring the state’s Board of Public Utilities to establish standards for tariffs that will apply to all data centers of at least 50 MW with the aim of shielding other ratepayers from costs associated with connecting large loads to the grid.
- The bill now heads to the desk of Democratic Gov. Mikie Sherrill, who has made energy affordability a core issue. Her predecessor, Phil Murphy, pocket-vetoed a similar bill earlier this year by not signing it before his term ended. The bill’s sponsor, Assemblyman David Bailey Jr., D, said Sherrill’s office was involved in forming the latest version and he expressed optimism she would sign it.
- Bailey said the new bill is more protective than the previous one: It applies to existing facilities as well as new ones, and the threshold for eligibility was lowered from 100 MW. “We really did not get much, if any, pushback from the utilities,” Bailey told Utility Dive in an interview. “They’ve been receptive to the process.”
Dive Insight:
Bailey said he hopes the bill can be a blueprint for other states to follow as parts of the country struggle to respond to skyrocketing demand for power from data centers and the grid investments needed to meet that demand.
The bill applies specifically to data centers, not all large loads, and charges the BPU with determining which costs are attributable to those customers.
“For the purpose of defining ‘large data center,’ the board shall aggregate the peak monthly energy demand of any data centers that are under common ownership or control, located on the same site or contiguous sites, or share substantial physical, operational, or interconnection infrastructure, and shall treat such aggregated facilities as a single large data center,” it says.
It requires the development of demand-response and efficiency programs, as well as mandating flexibility commitments with requirements to report flexibility performance to the board. It also ensures the priority curtailment of large data center customers before residential customers during system emergencies.
The bill requires prospective data centers to demonstrate that their project is unique and not duplicative, and they must provide financial guarantees that they will take or pay for at least 85% of service they request for a period of 10 years. The board would prioritize the interconnection of a data centers that make binding commitments to bring their own clean generation or energy storage.
It would also give the board authority to implement other provisions it deems necessary to protect ratepayers, including but not limited to transmission security agreements and other stipulations related to generation, distribution or substation facilities.
The bill was praised by advocates.
The bill takes a “balanced path forward for data center growth,” said Dawone Robinson, a managing director at the Natural Resources Defense Council. “Establishing this kind of framework will deliver cost savings to households faster and more effectively – and ensures any ‘bring your own capacity’ framework adopted by PJM [Interconnection] will support New Jersey’s climate targets.”
