New Jersey Governor Mikie Sherrill has unveiled a new policy proposal aimed at changing how data centers operate in the state, particularly in relation to their energy consumption and impact on public utilities.

The plan requires data centers to directly pay for the electricity they use and to take financial responsibility for upgrades needed to support their heavy demand on the power grid.

According to the proposal, legislation is being developed that would also require transparency from data centers regarding their energy and water usage, with mandatory public reporting every six months.

The governor emphasized that large facilities, some of which consume as much as 300 megawatts of electricity, should no longer rely on ratepayer subsidies and instead fund their own infrastructure needs, including grid expansion and maintenance.

The initiative also includes provisions for community development agreements, ensuring that data centers contribute financially to the local communities where they are built.These agreements would address concerns such as noise pollution and environmental impact.

Additionally, Sherrill’s plan pushes for the creation of well-paying union jobs during construction and operation phases, requiring prevailing wages and union labor participation.

The proposal comes amid rising electricity costs in New Jersey, where rates have surged significantly in recent years, partly due to growing demand from data centers and AI-driven computing facilities.The state already hosts around 80 data centers, with more projects under development.

Some municipalities have responded to these developments by attempting to restrict or ban new data center construction due to environmental and quality-of-life concerns.

The governor’s approach seeks to balance economic development with infrastructure sustainability, ensuring that technological growth does not increase financial burdens on residents or strain the state’s energy and water resources.