New Jersey Gov. Mikie Sherrill has signed three energy bills aimed at lowering electricity costs, increasing oversight of utility infrastructure investments, and requiring large data centers to help pay for the grid capacity they use.

The legislation is part of the Sherrill administration’s broader energy affordability efforts, which the governor said are expected to save New Jersey ratepayers more than $1 billion annually, according to Synapse Energy Economics.

The three bills include the Repeal ROE Adder legislation (S1673/A2757), the Advanced Grid Technologies Act (S4411/A5188), and the Data Center Fair Share Act (S731/A796).

The Data Center Fair Share Act creates a new ratepayer class and rate structure for data centers, requiring them to pay for their electricity use and associated grid infrastructure rather than shifting those costs to residential and commercial customers.

The legislation also includes incentives for data centers to bring additional clean power resources to the grid and requires large loads to reduce demand during periods of grid stress before residential customers are impacted.

The bill establishes a retail program outside the PJM Interconnection market that allows new large loads to offset capacity obligations by paying for demand reductions elsewhere on the system. According to the state, the program is intended to accelerate deployment of distributed energy resources funded by data center demand.

Mary Rafferty, executive director of Common Charge, a nonprofit coalition that advocates for using distributed energy resources, said the legislation creates a pathway for data centers to invest in local energy solutions.

“Data centers are driving a lot of the new demand straining New Jersey's grid, and the Data Center Fair Share Act puts real dollars into efficiency, smart thermostats, and battery storage in the homes, businesses, and communities nearby,” Rafferty said. “That investment will help meet new demand, strengthen the local grid, and lower bills for everyone at the same time.”

Rafferty said existing distributed energy resources, including batteries, smart thermostats, and rooftop solar, can help meet growing electricity demand.

“By skipping the need to build pricey new power plants and tying the cost to the companies creating it, these community power networks operate at a fraction of the price, lowering bills for everyone,” she said.

The Advanced Grid Technologies Act requires utilities to obtain state approval before building supplemental transmission projects, including additional wires, poles, and substations. The legislation establishes review processes for projects using advanced transmission technologies.

The state said supplemental project spending accounted for 79% of New Jersey ratepayer transmission expenses from 2008 through 2025, totaling $14.7 billion, according to the Rocky Mountain Institute.

The Repeal ROE Adder legislation removes an incentive that allows utilities participating voluntarily in a regional transmission organization to receive an additional 50 basis points on their return on equity. The bill requires New Jersey utilities to participate in the regional transmission organization, eliminating eligibility for the additional incentive.

In addition to signing the legislation, Sherrill announced bill credits for New Jersey electricity customers. All 3.6 million residential ratepayers will receive a $25 credit through the Residential Universal Bill Credit program, while lower- and moderate-income households will receive an additional $150 credit through the Residential Energy Assistance Payment program.

“I made a commitment to rein in energy costs, and today we are delivering on that commitment,” Sherrill said. “We’re putting money back into people’s pockets while holding utility companies and large data centers accountable through stronger oversight and smarter incentives that will drive down costs and strengthen our grid.”

The governor also highlighted additional energy actions taken by the administration, including expanding community solar efforts, approving clean energy projects, supporting battery storage development, and establishing policies intended to address growing data center demand.