S731

An Act concerning the provision of electricity to data centers and supplementing Title 48 of the Revised Statutes.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

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 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 100 megawatts.

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 data centers. The board may establish rates specific to large load data centers for use by an electric public utility in formulating the tariff. The tariff shall be designed to:

(1) ensure that non-data center ratepayers are protected from any increased costs that result from increased electricity demand caused by large load data centers; and

(2) incentivize large load data centers 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 data center.

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 to each large load data center within the electric public utility’s service area. The board shall have the authority to determine whether a facility qualifies as a large load data center pursuant to this section.

e. All rates, terms, and conditions established by the board for large load data centers shall reasonably protect ratepayers against increased costs resulting from new transmission, distribution, capacity, or energy rates resulting solely or primarily from serving large load data center customers. In carrying out the provisions of this section, the board shall require each utility to: (1) ensure that any new large load data customer provides adequate financial guarantees that they will take 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 data center customer to demonstrate, to the reasonable satisfaction of the utility, that the proposed project is unique and not duplicative of any other large load data center 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 data center 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. The board may approve utility rate filings that relax the requirements of this subsection if a large load data center 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.

2. This act shall take effect immediately.

STATEMENT

This bill would require each electric public utility in the State to develop and submit to the Board of Public Utilities (BPU) a tariff for certain data centers.

Specifically, the bill would apply to data centers that have a maximum monthly demand of at least 100 megawatts. The bill would require the tariff to be designed to: (1) ensure that non-data center ratepayers are protected from any increased costs that result from increased electricity demand caused by data centers; and (2) incentivize data centers to develop and utilize methods to increase energy efficiency, including through the use of technologies that capture and utilize the heat produced by the data center. Commencing one year after the bill's enactment, the bill would require electric public utilities to apply the tariff to each data center located in their service area.

The bill would also provide that all rates, terms, and conditions established by the BPU for large load data centers would be required to reasonably protect ratepayers against increased costs resulting from new transmission, distribution, capacity, or energy rates resulting solely or primarily from serving large load data center customers. The bill would authorize the BPU to impose certain requirements on electric public utilities in order to protect ratepayers, including ensuring that any new large load data customer provides adequate financial guarantees that they will take at least 85 percent of service they request for a period of not less than 10 years from when service commences.