Data Centers Are The Reason New Jersey Electric Bills Have Gotten So High

SECAUCUS, NJ — In the past two years, residents of Secaucus have been stunned, baffled and furious over their skyrocketing electric bills.

And now, finally, we know the reason why.

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Data centers account for 70 percent of the projected increase in demand to the electricity grid. This was an admission made last year by PJM Interconnection, the company that manages the electric supply power grid in 13 U.S. states, including New Jersey.

And the current supply on the grid is not even meeting how much electricity data centers demand. As a result, utility companies, such as PSE&G, are buying more energy from out of state and passing those costs directly down to customers.

In the past two years, PSE&G has increased both the transmission charge to customers and the capacity charge to customers.

"PJM has been screaming for a while now saying we don't have enough energy generation to supply this data center boom," said Anjuli Ramos, director of the New Jersey Sierra Club. "This has been long brewing and we are just now seeing the explosion in electric bills because we are seeing data centers built left and right."

Last week, NJ Governor Mikie Sherrill proposed a plan that will require data centers start paying tariffs to offset how much electricity they suck up. They will also have to start reporting to towns and the state their exact electric and water consumption.

NJ Sierra Club also wants all data centers to be required to install solar panels on their roofs, in order to generate their own electricity, but that is not part of Sherrill's proposal.

Matt Smith, director of Food & Water Watch New Jersey, said Sherrill's ideas lack teeth.

"The crisis is now. What she proposed doesn't call for them to pay for 100 percent of the energy they're predicted to require; they will pay 85 percent, and I am still unclear where they got this 85 percent number from. They should be paying for 100 percent," he said this week.

Sherrill's plan calls for data centers to pay 85 percent of their requested power allocation over a minimum of 10 years.

Food & Water Watch wants the governor to put an immediate moratorium on any new data center construction in New Jersey, until the state can figure out a way to make data centers pay without passing costs onto homeowners.

Smith compared data centers to a runaway train that nobody knows how to control.

"Data centers have to start paying more than you and I. They have to start paying to cover the expense they are currently passing on to ratepayers. It's unconscionable," he said. "(The government) knew the scale and scope this potential industry had. And instead of putting some common-sense rules in place before this development boom took place, they were busy giving over a billion dollars in tax breaks to data centers. That was their priority."

"We have to protect ratepayers from this industry and we have to require the wealthiest corporations in the word, Big Tech, to pay for the costs these data centers are creating on our electric grid."

Ramos added:

"Data centers tend to be built where fiber optic cables are, and North Jersey has a lot of fiber optic cables," she said. "That's why you're seeing so many data centers concentrated in North Jersey."

Secaucus has 10 data centers within town limits, and two more are coming, Mayor Mike Gonnelli said this week. That doesn't even include other data centers in the Meadowlands that surround the tiny town. A new one is being built where the Burlington Coat Factory used to be located at the end of Hartz Way and CoreSite, which already operates a massive data center on Enterprise Avenue, will build a second data center on County Avenue.

Gonnelli said this week he has "no problem" with data centers opening in town.

"They pay a lot of taxes, a lot," he emphasized. "Nobody works in data centers; they bring very little traffic."

Gonnelli said the bigger problem is that New Jersey no longer produces any electric energy in state, and needs to buy it off the grid, at a premium.

"They shut down the plant behind Laurel Hill (Hudson Generating Station, a coal-powered plant PSE&G closed in 2017)," said Gonnelli. "So now we are buying power from every place else and we have to pay for that."

Gonnelli is a Democrat. Other lawmakers, both Democrats and Republicans from across the state, have said this same thing.

"The problem is we no longer produce any electricity in New Jersey," Assemblyman Gerry Scharnfenberger, a Republican from Monmouth County. "So we have to buy it off the grid. That's the real problem nobody is talking about. "

In November, right after the NJ governor's election, PSE&G CEO Ralph LaRossa wrote this op-ed, urging Sherrill to make New Jersey generate electricity again.

"PSEG has to figure it out with data centers. Because they just keep coming," said Ramos. "They use tremendous amounts of energy, most of which comes from fossil fuels. There's also water pollution. A lot of their water cooling systems are not closed-loop, meaning there is significant risk to releasing chemicals back into the water supply ... I would say just stop data center construction altogether if everyone in this country would say, yeah, sure I'm gonna put down my phone, I'm gonna stop using AI and the Internet; I'm gonna stop using social media."

"The government needs to get control."

Read: Fool’s Gold: The Hidden Costs of AI Data Centers for New Jersey