New Jersey Gov. Mikie Sherrill ran last year in part on a platform to rein in rising energy costs.
The state has some of the highest electricity rates in the country. But six months into her tenure, many New Jerseyans are still looking for relief, especially as summer temperatures soar. And energy experts say Sherrill needs to do more to bring prices down.
For Catherine Hunt, an 82-year-old retiree on a fixed income, that’s raised questions about how much to use her air conditioner.
Ten years ago, she moved into a one-bedroom apartment in the Rossmoor senior living community in Monroe Township. She said she and other residents are worried about the cost of keeping cool.
“I'm asking other people what they're going to do… they don't know,” she told Gothamist. “They're deer in the headlights right now.”
When faced with skyrocketing energy costs last winter, Hunt said she opted to turn off the heat and layer up in warm clothes – throwing on a winter coat like she was going outside. She said her electricity bill went from an easily manageable $50 per month to $400 in the colder months.
“Opening that bill for me and seeing that number. Oh, I just went, ‘Yikes, what can I do about this?’” she said.
Instead of welcoming family and friends into the apartment, she’d entertain them at a local restaurant.
“I just told them, ‘There's no heat in here, so you probably won't want to visit. I’ll meet ya at Sal's,'” she said.
Catherine Hunt at Rossmoor Senior Living in Monroe Township, New Jersey.
In the last year, New Jerseyans, on average, paid about 22% more for electricity than the year before, amounting to an annual increase of nearly $400 per household, according to data from MIT and the climate news site Heatmap. That’s a higher spike than any other state in the country.
Abe Silverman, an energy research scholar at Johns Hopkins University, said costs are being affected by several factors — including rising inflation and higher natural gas prices that fuel electricity generation. But more than anything, he said it’s due to the increased demand from the data center boom.
”The fundamental challenge is that we are experiencing tremendous growth and demand for electricity. There are just more people who want to use more electricity — and most of them are AI data centers,” he said.
There are already more than 80 data centers operating in New Jersey alone, and the state expects more to come online. PJM, the regional grid operator, agreed this major growth in demand from data centers is driving up prices.
“While we currently have enough electricity generating resources to meet demand, we are experiencing substantial demand growth being driven by data centers and the artificial intelligence race,” said Jeff Shields, a spokesperson for PJM, the regional grid operator.
‘Still costs too much’
Last year, Sherrill staked her campaign for governor on getting New Jerseyans’ bills under control. On her first day in office, she signed an executive order "freezing" energy rates — directing the state utility regulator to deny utility companies' requests to raise rates.
“We froze the cost per kilowatt hour. So think of it as freezing the cost per gallon at the pump,” Sherrill said in an interview with Gothamist.
But for ratepayers like Hunt, that price is still more than she can afford, even if it doesn’t rise any further.
“ If they froze it at what it is now … I would have to go through another winter turning off my heat,” she said.
Brian Lipman, New Jersey’s ratepayer counsel, an attorney working on behalf of all New Jerseyans who pay an electric bill, said the Sherrill administration needs to do more to lower people’s bills.
“Freezing them is the first step. We certainly don't want them to go up, but I think we have to look at ways we can reduce them,” Lipman said.
Will prices ever go down?
Ultimately, the only way to bring down prices is to build more power generation capacity, including more wind and solar, Silverman said.
“We absolutely need to be thinking about how do we expand the pie. And at the same time we're expanding the pie, we need to think about who's paying for that expansion,” he said.
Sherrill said she wants tech companies to cover that cost.
“That's an incredibly expensive proposition. And having the data centers take on that burden can significantly drive down the cost to consumers here in New Jersey,” she said.
The state Legislature passed legislation on Wednesday that will require AI data centers using 100 megawatts or more to pay for grid upgrades. It also mandates that facilities using large amounts of electricity during peak demand agree to pay at least 85% of their requested power for 10 years to prevent everyday ratepayers from subsidizing cost if the data centers reduce power use. It now heads to Sherrill’s desk for her signature.
At least a dozen other states have proposed similar policies. New Jersey is also trying to make it easier to build more renewable and nuclear power projects. And, like many states, it has deployed a suite of renewable programs — such as expanding rooftop solar and battery storage to store energy for use during peak load times.
In addition, the Sherrill administration has tasked its utility authority with researching a strategy for deploying virtual power plants using batteries connected to people’s homes and other facilities.
But Silverman said larger infrastructure projects to expand the grid won’t be built fast enough to address the current affordability crisis.
“When I look at what's around the corner, what can we do right now to reduce prices, I almost always come back to batteries, solar, and things like virtual power plants and demand management,” he said.
UPDATE: This story was updated with information about the state legislature passing data center legislation on Wednesday.
