A 796

[Fourth Reprint]
ASSEMBLY, No. 796
STATE OF NEW JERSEY
222nd LEGISLATURE
�
PRE-FILED FOR INTRODUCTION IN THE 2026 SESSION
Sponsored by:
Assemblyman DAVID BAILEY, JR.
District 3 (Cumberland, Gloucester and Salem)
Assemblyman JOE DANIELSEN
District 17 (Middlesex and Somerset)
Assemblyman CLINTON CALABRESE
District 36 (Bergen and Passaic)
Assemblywoman� ELIANA PINTOR MARIN
District 29 (Essex and Hudson)
Senator� JOHN J. BURZICHELLI
District 3 (Cumberland, Gloucester and Salem)
Senator� JOHN F. MCKEON
District 27 (Essex and Passaic)
Co-Sponsored by:
Assemblywomen Donlon, Speight, Peterpaul, Assemblymen
Venezia, Karabinchak, Assemblywoman Bagolie, Assemblyman Singh, Assemblywoman
Reynolds-Jackson, Assemblyman Bhalla, Assemblywoman Brennan, Assemblymen Moen,
Macurdy, Tully, Assemblywoman Swain, Senators Turner, Beach, Moriarty, Diegnan,
Singleton, Mukherji, Cryan, Greenstein and McKnight
SYNOPSIS
���� Requires electric public utilities to develop and
apply special rules for certain data centers to protect non-data center
customers from increased costs.
CURRENT VERSION OF TEXT
���� As amended by the Senate on June 18, 2026.
��
An Act concerning the provision of electricity to 1[data
centers]
2[certain
commercial customers1]
certain data centers2 and
supplementing Title 48 of the Revised Statutes.
���� Be It
Enacted by the Senate and General Assembly of
the State of New Jersey:
���� 3[1. a.� As used
in this section:�
���� �Board� means the Board of
Public Utilities.
���� �Electric public utility�
means the same as the term is defined in section 3 of P.L.1999, c.23
(C.48:3-51).
���� �Large load 1[data center�
means a facility: �(1) whose primary services are the storage, management, and
processing of digital data; (2) that is used to house computer and network
systems, including associated components such as servers, network equipment and
appliances, telecommunications, and data storage systems, systems for
monitoring and managing infrastructure performance, Internet-related equipment
and services, data communications connections, environmental controls, fire
protection systems, and security systems and services; and (3) has, or is
projected to have, a maximum monthly demand of at least] 2[customer�
means a commercial customer for retail electric service that is a centralized
facility or facilities with a monthly demand of more than1] data
center� means a facility or facilities: (1) whose primary services are the
storage, management, and processing of digital data; (2) that is used to house
computer and network systems, including associated components such as servers,
network equipment and appliances, telecommunications, and data storage systems,
systems for monitoring and managing infrastructure performance,
Internet-related equipment and services, data communications connections,
environmental controls, fire protection systems, and security systems and
services; and (3) is a commercial customer for retail electric service that
requests service of2
100 megawatts 2or
more of peak load, served at a single meter location or a single contiguous
facility, if served by more than one meter location2 .
���� b.��� No later than 180 days
after the effective date of this section, each electric public utility shall
file an application with the Board of Public Utilities to establish a tariff
for the provision of electricity to large load 1[data centers] 2[customers1] data
centers2
.� The board may establish rates specific to large load 1[data centers] 2[customers1] data
centers2
for use by an electric public utility in formulating the tariff.� The tariff
shall be designed to:�
���� (1)� ensure that 1[non-data
center ratepayers are protected from any increased costs that result from
increased electricity demand caused by large load data centers; and] other
electric public utility customers do not subsidize large load 2[customers] data
centers2
and all costs attributable to the electric public utility�s large load 2data
center2
customers are assigned to the large load 2[customers] data
centers,2
as determined by the board;1
���� (2)� 1contain
protections necessary to ensure that other electric public utility customers
are not placed at risk for paying stranded costs associated with the electric
public utility serving the large load 2[customer] data
center2
; and
���� (3)1�
incentivize large load 1[data centers] 2[customers1] data
centers2
to develop and utilize methods to increase energy efficiency, including through
the use of technologies that capture and utilize the heat produced by the large
load 1[data center] 2[customer1] data
center2
.
���� c.��� The board shall
expeditiously review, pursuant to the provisions of section 7 of P.L.1999, c.23
(C.48:3-55) and the rules or regulations adopted pursuant thereto, each
application submitted pursuant to this section, and shall approve the
application if the board determines that it complies with the requirements of
this section and all other applicable laws, rules, and regulations.
���� d.��� Commencing one year
after the effective date of this section, an electric public utility shall
apply the tariff developed pursuant to this section 1, as
approved by the board,1
to each large load 1[data center] 2[customer1] data
center2
within the electric public utility�s service area.� The board shall have the
authority to determine whether a facility qualifies as a large load 1[data center] 2[customer1] data
center2
pursuant to this section.
���� e.��� All rates, terms, and
conditions established by the board for large load 1[data centers] 2[customers1] data
centers2
shall reasonably protect 1[ratepayers] other
electric public utility customers1
against increased 1transmission
and distribution1
costs resulting 1[from new
transmission, distribution, capacity, or energy rates resulting]1
solely or primarily from serving large load 1[data center]1 2[customers] data
centers2
.� In carrying out the provisions of this section, the board shall require each
1electric
public1
utility to:� (1) ensure that any new large load 1[data]1 2[customer] data
center2
provides adequate financial guarantees that they will 1[take] pay for1 at
least 85 percent of service they request for a period of not less than 10 years
from when service commences; (2) require any new large load 1[data center]1 2[customer] data
center2
to demonstrate, to the reasonable satisfaction of the 1electric
public1
utility, that the proposed project is unique and not duplicative of any other
large load 1[data center] 2[customer1] data
center2
project, whether located in New Jersey or elsewhere, or to identify the
project�s interdependencies; (3) provide for the posting of deposits or
financial security, in a form approved by the board, sufficient to protect
ratepayers against a material increase in rates should the large load 1[data center] 2[customer1] data
center2
project cease operations or take less service than anticipated over the 10-year
period beginning when service commences; and (4) implement other provisions
that the board deems necessary to protect ratepayers 2,
including transmission security agreements or similar measures that ensure new
transmission costs resulting from large load data centers are allocated fairly2 .� The
board may approve 1electric
public1
utility rate filings that relax the requirements of this subsection if a large
load 1[data center] 2[customer1] data
center2
commits to providing sufficient operational flexibility or commits to bringing
additional sources of energy and capacity online to meet its load, such that
these requirements are not necessary to protect ratepayers.]3
���� 31.�
a.� As used in this section:��
���� �Board� means the Board of
Public Utilities.
���� 4[�Capacity
value� means the quantified reliability contribution of an energy resource,
expressed in megawatts, representing the amount of unforced capacity the
resource can reliably provide to the grid during system peak demand hours or
high-risk operating conditions.]
�� �Capacity
resource� means an energy resource, including generation, energy storage,
demand response, demand reduction, energy efficiency, or any combination
thereof, that the board, consistent with paragraph (7) of subsection b. of this
section, determines is capable of contributing to system reliability during
periods of peak demand or high-risk operating conditions, and that has been
assessed a capacity value pursuant to that paragraph.4�
���� �Co-located generation�
means an electric power generation facility that is interconnected directly
with a data center customer�s electrical load, regardless of whether or not the
facility is also interconnected with the transmission or distribution system,
and regardless of whether or not the customer receives supplemental or backup
service from an electric public utility.� �Co-located generation� shall not
include emergency electric power generation.
���� �Demand flexibility� means
the ability of a customer to modify the timing, level, or pattern of their
electricity consumption in response to grid conditions, price signals,
reliability needs, or direction from the electric public utility or regional
transmission organization, including through load curtailment, load shifting,
on-site generation dispatch, and energy storage.
���� �Electric public utility�
means the same as the term is defined in section 3 of P.L.1999, c.23
(C.48:3-51).
���� �Large data center� means a
data center that meets the size threshold and other defining characteristics
established by the board pursuant to paragraph (1) of subsection b. of this
section.
���� �Large data center
customer� means a customer of an electric public utility responsible for one or
more large data centers served by that electric public utility and that meets
the defining characteristics established by the board pursuant to paragraph (1)
of subsection b. of this section.
���� b.� No later than 12 months
after the effective date of this section, the Board of Public Utilities shall
establish, by order for every electric public utility, standards for the
provision of electricity to large data center customers by electric public utilities.
The standards shall be developed with stakeholder input and designed to:��
���� (1) identify the
appropriate defining characteristics of a �large data center� and a �large data
center customer� for each electric public utility including, but not limited
to, minimum megawatt size designation, which shall not be greater than 50
megawatts.� For the purpose of defining �large data center,� the board shall
aggregate the peak monthly 4[compute and
compute-related]4
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;
���� (2) ensure that other
electric public utility customers do not subsidize large data center customers
and that all costs attributable to the electric public utility�s large data
center customers are allocated to 4those4 large
data center customers, including, but not limited to, the costs of any
infrastructure investment related to generation, transmission, distribution, or
substation facilities incurred solely or primarily to serve that customer;
���� (3) ensure that other
electric public utility customers are not at risk of paying for stranded costs
associated with an electric public utility serving large data center
customers;�
���� (4) incentivize large data
center customers to develop and utilize methods to increase energy efficiency,
including through the use of technologies that capture and utilize the heat
produced by large data center customers;
���� (5) incentivize large data
center customers to bring their own 4new4 clean
generation or energy storage to meet their 4energy4 needs;
���� (6) develop a framework for
the tariff treatment of large data center customers served in whole or in part
by co-located generation, to ensure that such customers pay an appropriate
share of transmission, distribution, capacity, reliability, and public benefit
costs attributable to their actual or potential use of the electric public
utility system;
���� (7) identify the
appropriate assessment method for electric public utility evaluation 4[of the
capacity value]4
of any capacity 4resources4 procured
by large data center customers, which shall be aligned with the 4[energy
resource�s]4
accredited effective load carrying capability or equivalent performance
metric recognized by the regional transmission organization 4for
energy resources procured, and an appropriate adjustment factor recognized by
the regional transmission organization for load reductions procured, both to be
set at the time of procurement4
;
���� (8) require that each
electric public utility submit Large Load Adjustments 4[and] ,4 Peak
Shaving Adjustments 4,
and customer peak load contribution4
to the regional transmission organization or any successor organization,
which shall provide for inclusion of both the aggregate amount of anticipated
new or expanded data center electrical load, as well as the aggregate amount of
resources a large data center customer has procured to meet their energy needs;
���� (9) identify the
appropriate parameters for demand-reduction trade programs each electric public
utility shall make available to 4[large]4 data
center customers.� The parameters shall:� (a) delineate eligible categories of
demand-reduction measures 4[large]4 data
center customers may take directly or contractually procure from third parties,
such as incremental energy efficiency improvements, demand response enrollment,
behind-the-meter energy storage, and managed electrification;� (b) ensure
sufficient protocols to demonstrate that the demand reductions are
quantifiable, additional, coincident with the periods of system or local need,
and measured using advanced metering infrastructure to read, and settle on an
interval basis, the customer accounts associated with demand reduction
measures; and (c) enable customers to export energy to the electric public
utility system during peak hours and provide for the establishment of negative
peak load contribution values for those exporting customers in a manner consistent
with at least one tariff filed and approved by the Federal Energy Regulatory
Commission;
���� (10) prioritize the
interconnection of large data center customers who make binding commitments in
fulfillment of the objectives stated in paragraphs (5) or (9) of this
subsection;
���� (11) ensure the priority
curtailment of large data center customers before residential customers,
excluding designated critical load, under system emergencies.� Any such
curtailment shall be considered firm load shed;
���� (12) establish application
and screening standards that require any prospective large data center customer
of an electric public utility to disclose any substantially similar request for
interconnection or electric service pending before any other utility, whether
located in New Jersey or elsewhere, and to describe the relationship of those
requests to the proposed project, so that the electric public utility may
appropriately plan its system and avoid duplicative or stranded infrastructure
investment, subject to reasonable protections for commercially sensitive
information; and
���� (13) address any other
challenges posed by timely interconnecting or serving large data center
customers as identified by the board, including measures to ensure that no
person evades the requirements of this section through corporate structuring,
project segmentation, behind-the-meter configurations, off-tariff arrangements,
or other similar arrangements.
���� c.� No later than 180 days
after the board issues an order establishing standards for the provision of
electricity to large data center customers pursuant to subsection b. of this
section, each electric public utility shall file a petition with the board for
approval of a rate class and tariff for the provision of electricity to large
data center customers.
���� d.� All rates, terms, and
conditions approved by the board for large data center customers shall
reasonably protect other electric public utility customers against increased
transmission and distribution costs resulting entirely or nearly entirely from
serving large data center customers, and promote reduction of those costs by
enhancing utilization of the electric grid.� In carrying out the provisions of
this section, the board shall require each electric public utility to:�
���� (1) ensure that any 4[new]4 large
data center customer provides adequate financial guarantees that it will pay
for at least 85 percent of the 4[service] electricity
supply4
it requests for a period of 10 years from when service commences or as
otherwise determined in the board�s standards;
���� (2) provide for the posting
of deposits, financial security, or, for 4large4 data
center customers with sufficiently high credit ratings, financial commitments,
in respective forms approved by the board, sufficient to protect ratepayers
against a material increase in rates should the large data center customer
cease operations or take less service than anticipated over the 10-year period
beginning when 4[service] electricity
supply4
commences, and authorize the board to approve a stranded cost recovery
mechanism applicable exclusively to the large data center customer class to
recover any costs not otherwise covered by the deposits, financial security, or
financial commitments;
���� (3) provide large data
center customers whose load or procured capacity is to be included in a Large
Load Adjustment, Peak Shaving Adjustment, or successor form of submittal to the
regional transmission organization or any successor organization with an accounting
of the quantities of their load or procured capacity to be included and an
opportunity to correct any such data prior to submission.� To the extent that a
large data center customer�s load has been included in a Large Load Adjustment
submitted to the regional transmission organization or successor organization,
the board shall ensure that payment by that large data center customer is
proportionate to its share of the costs allocated by the regional transmission
organization to the electric public utility of a Reliability Backstop
Procurement auction or successor mechanism administered by the regional
transmission organization.� Any large data center customer�s share of such
costs shall be reduced by that customer�s procurement of 4[supply,
storage, or demand reductions]
capacity resources4
, including any voluntary procurement under 4[paragraphs] paragraph4 (4)
4[or (5)]4 of
this subsection;�
���� (4) develop a voluntary
demand-reduction trade program through which 4[large]4 data
center customers may contract directly with a third party for, or otherwise
fund, verified demand flexibility by other customers on the same electric
public utility system.� In developing the trade program, each utility shall:
(a) ensure that no part of the cost of the transaction is recovered through
rates established by the board for any other ratepayer and that any benefit in
the form of the capacity reduction is allocated to the 4[large]4 data
center customer who has paid for the benefit, either by crediting a load
serving entity undertaking the demand reduction and serving the 4[large]4 data
center customer, or by assigning the capacity benefit to the 4[large]4 data
center customer as an offset to its peak load contribution value as
contemplated in paragraphs (3) and (6) of this subsection;� (b) prohibit
double-counting of demand reductions claimed for compliance under this
subsection and demand reductions claimed under any other state or federal
program, other than as contemplated in paragraphs (3) and (6) of this
subsection; (c) design the program for compatibility with 4the
load forecasting methods of the regional transmission organization,4 the
Peak Shaving Adjustment of the regional transmission organization, or any
similar mechanism used to reduce capacity needs, so that demand reductions
verified under the program are reflected in the load forecast used by the
regional transmission organization to procure capacity, including any capacity
procured under a backstop auction or similar mechanism; and (d) ensure that any
capacity that a large data center customer procures through a demand-reduction
program established pursuant to this subsection shall reduce the capacity
obligations of the large data center customer in the service territory of the
electric public utility under paragraphs (3) through (6) of this subsection, as
applicable;
���� (5) require demand
flexibility commitments by large data center customers, which shall include at
least one of the following:� (a) commitments to curtail or reduce load,
excluding designated critical load, during system emergencies, transmission
constraints, and peak demand periods as directed by the electric public utility
or the regional transmission organization; (b) measurable, enforceable
performance standards with financial penalties for non-performance as specified
in the tariff; (c) participation in a voluntary demand-reduction program
developed pursuant to paragraph (4) of this subsection 4[,] ;4 or
(d) until such time as the board adopts standards for voluntary
demand-reduction programs and approves a program for the respective electric
public utility, other contractual flexibility commitments that the board
determines reasonably meet the substantive requirements of paragraph (4) of
this subsection;
���� (6) to the extent that a
large data center customer has procured 4[supply, storage, or demand
reductions]
capacity resources4
, including but not limited to voluntary procurement as contemplated under
paragraphs 4[(4) or (5)] (3) or (4)4 of
this subsection, ensure protection of that customer from advanced curtailment
ahead of other firm load 4[pursuant to] that may
otherwise be required by4
a �connect and manage� or successor program administered by the regional
transmission organization;�
���� (7) require annual
reporting of actual flexibility performance to the board;
���� (8) require any new large
data center customer to pay the reasonable costs of any interconnection, system
impact, and facilities studies undertaken by the electric public utility;
���� (9) assess the capacity
value of total capacity 4resources4 procured
by a large data center customer to meet its energy needs.� The value of the
capacity shall be determined at the time of the electric public utility�s
initial assessment and any future changes in determining the system, local, or
other value of that capacity shall not affect any allocation of costs or
curtailment for purposes of paragraphs (3) or (6) of this subsection; and
���� (10) implement other
provisions that the board deems necessary to protect ratepayers, including
transmission security agreements or similar measures that ensure new
transmission costs resulting from large data center customers are allocated
fairly.
���� e.� The board shall
expeditiously review, pursuant to the provisions of section 7 of P.L.1999, c.23
(C.48:3-55) and the rules or regulations adopted pursuant thereto, each
petition submitted pursuant to this section, and shall approve the petition if
the board determines that it complies with the requirements of this section and
all other applicable laws, rules, and regulations.
���� f.� Commencing upon the
board�s approval of the tariff filed pursuant to subsection c. of this section,
an electric public utility shall apply the tariff developed pursuant to this
section, as approved by the board, to each large data center customer within
the electric public utility�s service area 4[solely with respect to that
customer�s new large data centers]4
.� The board shall have the authority to determine whether a customer
qualifies as a large data center customer pursuant to this section. Any
application for new or expanded service above the megawatt threshold
established pursuant to paragraph (1) of subsection b. of this section that is
pending before an electric public utility or the board on the effective date of
the approved tariff shall be subject to the approved tariff upon the
commencement of service, unless the board determines that application of the
tariff would be inequitable.
���� g.� 4Notwithstanding
any other provision of this section to the contrary, a large data center
approved by an electric public utility to receive service prior to the
effective date of this act shall not be subject to the provisions of paragraphs
(1), (2), and (8) of subsection d. of this section with respect to such
service, but shall otherwise remain subject to the provisions of this section,
including the requirements of paragraphs (3), (4), (5), (6), (7), and (9) of
subsection d. of this section.� With respect to a large data center approved by
an electric public utility to receive service prior to the effective date of
this act, the board may provide for a reasonable phase-in of the cost
allocation required under paragraph (3) of subsection d. of this section.� The
exemption provided by this subsection shall not be diminished by the renewal,
extension, or amendment of an agreement for the approved service, and shall not
extend to any application for new or expanded service above the megawatt
threshold established pursuant to paragraph (1) of subsection b. of this
section.� The exemption provided by this subsection shall apply only to the
megawatts of service approved before the effective date of this act, and any
service above that approved quantity, whether or not aggregated with the
approved service pursuant to paragraph (1) of subsection b. of this section,
shall be subject to the tariff developed pursuant to subsection c. of this
section.
���� h.4� To
the extent that the regional transmission organization establishes deadlines or
processes for a capacity auction, including a backstop reliability auction,
that precede the deadlines of subsections b. and c. of this section, nothing in
this section shall prevent a bilateral or multilateral demand-reduction
contract from being entered into, in substantially the form contemplated by
paragraph (9) of subsection b. of this section and paragraphs (4) and (5) of
subsection d. of this section, and filed with the board.� The board shall
accept the contract unless the board finds its terms are inconsistent with the
substantive provisions of paragraph (9) of subsection b. of this section and
paragraphs (4) and (5) of subsection d. of this section, and, upon acceptance,
the demand reduction shall be credited to the electric public utility and data
center in the same fashion as contemplated by a transaction completed through a
voluntary demand-reduction trade program under paragraph (4) of subsection d.
of this section, including credit as a Peak Shaving Adjustment.
���� 4[h.] i.4� Any
rate or service agreement entered into between an electric public utility and a
large data center customer, whether pursuant to a tariff approved under this
section or pursuant to section 3 of P.L.1995, c.180 (C.48:2-21.26) or any other
authority, shall satisfy the substantive requirements of subsection d. of this
section. The board shall not approve, and shall not allow to take effect, any
agreement under section 3 of P.L.1995, c.180 (C.48:2-21.26) or successor
authority that materially diminishes the protections established by this
section.
���� 4[i.] j.4 �Nothing
in this section is intended to, or shall be construed to, affect or displace
the exclusive jurisdiction of the Federal Energy Regulatory Commission over
wholesale sales of electric energy or capacity, or over rates, terms, and
conditions of electric transmission service, under the �Federal Power Act� (16.
U.S.C. s.791 et seq.).3
���� 2.��� This act shall take
effect immediately.