A year ago, the New Jersey State Policy Lab funded us to answer a simple question: are data centers raising residential electricity bills in New Jersey? Our research shows the answer is “mostly not yet.” But getting to that answer changed how we look at the problem.
The impact of data centers on local bills through 2024 is very small. The reason is that New Jersey’s exposure isn’t just about data centers inside the state. It’s about data centers across the entire region.
The Grid Crosses State Lines
First, we mapped data centers in New Jersey. The state has about seven million square feet of data center space. Most of these are older facilities built for finance and telecom companies, not the massive new campuses built for artificial intelligence. In our 24-state study, New Jersey has 50 operational facilities. Texas has 651 and Virginia has 552. This means we couldn’t just look at New Jersey. We had to look at the regional grid.
New Jersey buys power through the PJM Interconnection, a wholesale market covering 13 states and the District of Columbia. Every June, the generation price on a New Jersey bill resets based on a state auction. A major part of that price comes from PJM’s capacity market. This is a charge everyone pays to ensure that enough power plants are available during peak hours.
In July 2024, PJM’s capacity price for the 2025-2026 delivery year spiked to $269.92 per megawatt-day, up from $28.92. This caused New Jersey residential bills to jump 17 to 20 percent on June 1, 2025. PJM’s independent market monitor estimated that data center electricity demand drove 63 percent of that price increase. That translates to about $9.3 billion spread across the region.
A minimal amount of that new data center demand is physically located in New Jersey. A massive data center in Virginia can raise residential bills in New Jersey.
What the Numbers Say Through 2024
To test this, we built a dataset covering 22,834 ZIP codes across 24 states from 2014 to 2024. We linked 2,277 data centers to household electricity spending data.
The raw numbers are surprising.
Nationally, bills in ZIP codes with data centers are actually slightly lower than in ZIP codes without them. The gap hasn’t widened over the decade, even in states like Virginia that have added hundreds of facilities. Bills rose everywhere after 2021 due to higher natural gas prices, regardless of whether a data center was nearby.
Our statistical models confirmed this. Having a data center nearby only raised a typical bill by about $2.09 a month. That effect disappeared completely when we controlled for other factors and looked at the utility territory level.
There are three reasons why local impacts are so small: (i) Utilities spread infrastructure costs across their entire service territory, (ii) Data centers pay separate, large-load tariffs, (iii) Tech companies deliberately build data centers where power is already cheap, and the grid has extra capacity.
The Future Capacity Problem
Even though bills haven’t spiked locally yet, the electrical grid is facing a bottleneck. Modern data centers use much less water than older ones. Closed-loop cooling systems use up to 10 times less water. But this cooling takes more electricity.
PJM expects 70 gigawatts of new large-load demand by 2038. Meanwhile, 15 gigawatts of older power plants have retired since 2022. It takes six to seven years to build a new power plant, but only two to three years to build a data center.
Our models show a 4-to-5-year lag before a new data center affects local bills. This matches how utility rate cases work. The massive data centers breaking ground today won’t show up on a residential bill until the regulatory process catches up.
Why People are Pushing Back
Despite the numbers, about 70 percent of Americans oppose new data centers. This opposition happens whether they live near one or not. Technology writer Jasmine Sun recently reported from towns in Wisconsin and Michigan fighting data center proposals. She found that residents rejected corporate claims about cooling efficiency, taxes, and jobs. The backlash is about trust and leverage.
Unlike old factories, data centers employ very few people once built. They don’t support the local economy in the same way. But they do require land, water, and power. For the first time in years, local zoning boards and residents have leverage over big technology companies.
When people say, “data centers raised my bill,” this may be a claim having to do with their finances, but it may also be a broader concern being raised as to the perception that large companies taking local resources.
Our Next Step: Talking to Residents
We want to separate those two ideas. My student Kaitlyn Rich and I are in the process of interviewing about 50 New Jersey residents to understand these beliefs and how strongly people hold them. We are sitting down with people and walking through their actual utility bills while we ask them to look at the generation charge, the delivery charge, and the capacity component.
Our goal is to help people understand and ask who they hold responsible for increases and whether seeing the exact breakdown changes their view. This will help us understand how the general public interprets these complex charges.
What This Means for New Jersey
Our findings point to three takeaways:
First, fighting over where to put data centers inside New Jersey won’t protect ratepayers from the costs. The financial exposure comes through the regional PJM market. The real debate belongs to the New Jersey Board of Public Utilities at the state level as well as federal regulators.
Second, tariff design matters more than location. PJM has proposed that new large loads connecting after June 2027 must provide their own power or face getting cut off during shortages. Companies like Microsoft and Anthropic have promised to cover the grid costs they create. The state needs to turn those promises into enforceable rules.
Third, utilities need to explain their bills better. If residents can’t tell the difference between a regional capacity charge and a local delivery charge, they will blame any increase on the most visible target. Our interviews will help show what a clear, honest utility bill should look like.