Gov. Murphy signs new law to investigate how AI growth is fueling rising electric costs

With electric rates skyrocketing by as much as 20% this summer, Gov. Phil Murphy this week signed a law to study how rapidly growing AI technology is fueling the high cost of energy.

The new law directs the Board of Public Utilities to complete a study within a year on the effect of electricity usage by data centers.

The data centers that power AI technology, including the widely used ChatGPT, require enormous amounts of energy. Regulatory officials acknowledged this year that they were caught off guard by this growth, which resulted in PJM, the regional grid operator that moves the electricity from power plants across several states, raising its rates on the distribution.

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Despite being a billion-dollar industry, utility ratepayers are paying a big price for this growth.

Under the mandated study, the BPU will find out how much the average homeowner will be paying for the next 20 years because of the demand imposed by data centers.

The BPU study will examine policies that could reduce the burden on ratepayers, including taxing the data centers for their energy usage.

The study is due in 15 months.

Break on the electric bills

In response to outrage about the hikes, the BPU last month approved a deferral of the rate increases that went into effect on June 1. 

Under the program, the state's utility companies will reduce bills by a total of $60 in July and August and then spread out that amount for six months starting in September. The idea is to allow ratepayers to pay for the hikes during the fall, when people are least likely to need energy-guzzling air conditioners.

The state will also use money from the Clean Energy Fund, the BPU's share of Regional Greenhouse Gas Initiative funds and the Solar Alternative Compliance Fund to slash costs for everybody by a total of $100 this year, with lower-income families getting another $150 in relief.

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