Gov. Mikie Sherrill announced a first-of-its-kind statewide strategy aimed at holding data centers accountable as New Jersey faces rising electricity costs tied to AI growth and expanding digital infrastructure. The plan would require transparency on energy and water use, force tech companies to help pay for grid upgrades, and create community protections and union jobs.

New Jersey Gov. Mikie Sherrill unveiled a sweeping statewide strategy Thursday designed to rein in the growing impact of data centers as artificial intelligence and advanced computing fuel soaring energy demand across the region.

Sherrill said data centers have become one of the biggest drivers of electricity costs in New Jersey, contributing to rising utility bills, pressure on the power grid, increased water consumption and growing concerns from local communities.

“Data centers are among the biggest drivers of energy costs, which I am working tirelessly to bring down,” Sherrill said during a press conference in Trenton.

According to the governor, PJM — the regional grid operator overseeing electricity distribution across multiple states — reported that data centers accounted for 70% of projected demand growth last year.

Sherrill warned that newer facilities can consume as much as 300 megawatts of electricity, enough to power entire towns, dramatically increasing pressure on New Jersey’s energy infrastructure and electric rates.

The governor’s proposal introduces what officials described as the nation’s first comprehensive statewide framework to regulate data center growth while allowing New Jersey to remain competitive in artificial intelligence innovation.

So, what’s the plan?

The proposal centers around four major pillars:

1. Making data centers pay their “fair share”

The state plans to require data center developers to bring their own energy supply online and pay for electrical grid upgrades needed to support massive energy consumption.

Instead of shifting infrastructure costs onto residents and ratepayers, officials said tech companies would be responsible for funding improvements to the grid.

“Not on my watch, not on your backs,” Sherrill said regarding higher electric bills for residents.

2. Transparency requirements

The plan would require large facilities to publicly report energy and water consumption every six months, giving residents and municipalities greater visibility into how resources are being used.

Officials and environmental advocates said communities currently have little information about how much electricity or water proposed facilities may consume.

3. Community benefit agreements

The administration also plans to establish statewide standards requiring developers to negotiate community benefit agreements with municipalities.

Those agreements could address concerns tied to:

  • Noise
  • Light pollution
  • Water use
  • Environmental impact
  • Local infrastructure needs

Communities could also negotiate investments such as:

  • Schools
  • Community centers
  • Workforce training
  • AI education programs

4. Union jobs and prevailing wages

The proposal would push developers to use union labor and provide prevailing wages for construction and long-term operations jobs tied to data centers.

AI growth and affordability concerns

Sherrill repeatedly tied the issue to affordability for New Jersey families.

Electricity prices in the region rose by roughly 20% last summer alone, according to the governor, who argued that unchecked growth in AI infrastructure could drive up utility bills if no safeguards are implemented.

Assemblyman Dave Bailey said residents should not be left “picking up the tab” for billion-dollar tech companies.

“Pay for what you say you need,” Bailey said of data center developers.

Environmental groups also backed the proposal, warning that data centers could strain water supplies and increase pollution without stronger oversight.

Still, state leaders emphasized they are not trying to block AI development.

Instead, Sherrill said the goal is to position New Jersey as a national leader in responsible AI infrastructure while protecting residents from rising costs and unchecked development.

“We are not going to be beholden to big tech,” the governor said. “We are going to chart our path forward here in New Jersey.”