New Jersey Legislature Passes Data Center Tariff Bill With 50 MW Threshold, 85% Take-or-Pay
- Data Centers Policy & Markets Regulatory State & Local Regulation
Marin Holt
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- 6 minutes read
- Load threshold: 50 MW
- Prior threshold: 100 MW
- Take-or-pay guarantee: 85% over 10 years
- Bill: A796
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New Jersey lawmakers on June 30, 2026 passed Assembly bill A796, which directs the state Board of Public Utilities to write tariffs for every data center drawing at least 50 megawatts and shift the grid-connection costs of those large loads off residential ratepayers. The measure now sits on Governor Mikie Sherrill’s desk. Sponsor Assemblyman David Bailey Jr. expects her to sign it, months after former Governor Phil Murphy pocket-vetoed a similar bill that used a higher 100 MW cutoff.
The bill lowers the trigger from 100 MW to 50 MW, pulling far more projects into a mandatory cost-recovery regime. Under A796, a qualifying data center must post financial guarantees to take or pay for at least 85% of the electric service it requests over a 10-year term, and it drops to the front of the curtailment line: utilities must cut power to data centers before residential customers during grid emergencies. Developers also have to show a project is “unique and not duplicative” to qualify for service.
What Changed
New Jersey’s earlier attempt died without a signature. This version narrows the threshold and hands the Board of Public Utilities a broader mandate: set the tariff standards, decide which grid-upgrade costs are attributable to data centers, and stand up demand-response and efficiency programs aimed at the same customers. The board also gets open-ended authority to “implement other provisions it deems necessary to protect ratepayers.” The NRDC, which backed the measure, called it “first in the nation” for the breadth of that BPU mandate.
Enforcement Reality
The teeth are in the take-or-pay guarantee and the curtailment order. An 85% floor over 10 years means a data center that overstates its load, a common tactic to reserve grid capacity, pays for power it never draws rather than leaving stranded-asset costs for other customers. The priority-curtailment clause removes a data center’s argument that it should stay energized during a shortage. What the statute does not yet fix is the number: the BPU still has to translate “attributable costs” into an actual rate, and that proceeding is where utilities, hyperscalers, and consumer advocates will fight over how much of a substation or transmission upgrade a single 50 MW load should carry.
Why It Matters
Data center load is the fastest-growing driver of new demand on the PJM grid that serves New Jersey, and states from Ohio to Oregon are testing who pays for it. New Jersey’s 50 MW threshold is among the lowest any state has set, so the BPU rate case will become a template other legislatures copy or avoid. For developers, the signal is concrete: siting a large load in New Jersey now carries a decade-long financial commitment before the first server rack powers on.
Critical Perspective
New Jersey’s A796 forces any data center drawing 50 MW or more to guarantee payment for 85% of its requested power over a 10-year term, and it moves those loads to the front of the curtailment line ahead of homes. The 50 MW trigger is among the lowest any state has set, yet Virginia’s Dominion Energy territory already carries the largest data center concentration in the country with no comparable take-or-pay floor, which raises the question of whether the rule deters projects or simply pushes them elsewhere on the PJM grid. Ohio is the nearest precedent: the PUCO approved AEP Ohio’s data center tariff in 2025 on the same pay-for-what-you-reserve logic, and hyperscalers contested that case for more than a year before it settled. So if the Board of Public Utilities still has to convert “attributable costs” into a real rate, what stops developers from locking in interconnection deals under the current rules before the new tariff ever takes effect?
Sources
- Utility Dive — New Jersey lawmakers send data center tariff bill to governor
- New Jersey Monitor — NJ legislators approve bills on data centers
- NRDC — New Jersey Passes Trailblazing Data Center Legislation
- WHYY — NJ data centers: Electric cost bill passes Assembly
