As data centers powering artificial intelligence multiply across the country, New Jersey and Indiana have adopted different strategies to keep the resulting electricity costs off the bills of everyday households.
New Jersey Gov. Mikie Sherrill signed legislation in July requiring the state’s Board of Public Utilities to create a separate rate structure for large data centers. The law ensures that costs for new substations, transmission lines or other grid upgrades built mainly to serve a data center are not passed on to other customers. It also requires large data centers to commit to paying for at least 85% of the electricity capacity they request over a 10-year period, in case their power use falls or the facility closes. Regulators are also directed to push data centers toward clean generation, energy storage, more efficient power use, and reduced demand during emergencies.
Sherrill followed that law with another this week requiring data center operators to report their energy and water use to the state twice a year. Her administration says the reporting requirement, paired with new guidance for municipalities, will help local officials understand data centers’ demands and negotiate more effectively with developers.
Indiana’s Negotiated Approach
Indiana has taken a different route. Instead of setting statewide rules in advance, state regulators approved a deal negotiated among Indiana Michigan Power (I&M), consumer advocates and major technology companies.
The agreement followed a wave of large projects announced in I&M’s service territory, which spans parts of Indiana and Michigan. Amazon Web Services announced an $11 billion data-center campus near New Carlisle, Indiana, in 2024, and Google announced a $2 billion project in Fort Wayne. Those announcements pushed I&M and state officials to determine how the added power demand and grid upgrades would be paid for.
Under the 2025 agreement, new large customers, including data centers, must make long-term financial commitments to pay for the electric service they request, even if their actual demand later falls short. I&M says those commitments let the new demand benefit existing ratepayers rather than burden them. The utility is now asking the Indiana Utility Regulatory Commission to cut base rates by $59 million in 2027, arguing that revenue from large customers makes the reduction possible.
If regulators approve the plan, I&M estimates a household using 1,000 kilowatt-hours a month would save about $100 a year. The utility has also proposed freezing all rates on customer bills for three years, with a decision expected in June 2027 and any savings starting that summer.
A Debate Over Which Model Works Better
Daniel Turner, executive director of the energy advocacy group Power The Future, said Indiana’s model is preferable to New Jersey’s more prescriptive rules, though he argued neither state has gone far enough to ensure the AI buildout adds power to the grid rather than simply drawing it down.
“Indiana’s approach is definitely the better of the two,” Turner told Fox News Digital. “At least Indiana is saying, ‘Hey, we don’t know where this is going, but we’re not going to put in all of the guardrails yet to stop progress from happening. Let’s work together and figure out what the solution is.'”
Turner said new power generation should be part of any data center deal from the outset. While New Jersey’s law encourages data centers to bring clean generation or storage online, Turner argued facilities should be built alongside the generation needed to run them and contribute capacity back to the grid.
“Every data center should be built in conjunction with the necessary power-generating facility to power it and give back to the grid,” he said.
Turner said data centers have become a political flashpoint, with officials often choosing sweeping restrictions or indefinite delays rather than working with utilities, developers and local communities on plans that protect ratepayers while adding needed power.
“The solutions to data centers are not complicated issues to solve,” he said. “They just require political will.”
Data center fights have also stirred local opposition elsewhere. In Tremonton, Utah, protesters objected when the Box Elder County Commission approved a proposed 40,000-acre AI data center development in May 2026, citing concerns over water use, energy demand and environmental impact. In Michigan, demonstrators held “Stop data centers” signs during President Trump’s July 2026 appearance at the General Motors Proving Ground in Milford.
A National Push From the White House
The Trump administration has tried to set a national standard for how the costs of AI power demand are shared. In March, the White House announced a Ratepayer Protection Pledge signed by Amazon, Google, Meta, Microsoft, OpenAI, Oracle and xAI, which the administration says commits the companies to cover the cost of additional electricity generation needed for AI data centers rather than pass those costs on to families.
Turner argued the stakes go beyond local utility bills, framing the buildout as tied to competition with China over control of artificial intelligence.
“When you tell Americans why we have to win the AI race, look at what China did with the Wuhan flu and how they tried to lie about that,” Turner said. “Now imagine they can do that with every single piece of intellectual property on every platform in real time. That alone should scare the crap out of Americans.”
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