As the AI boom drives an unprecedented hunt for electricity, two states are taking sharply different approaches to assuage fears that Big Tech’s massive energy needs will raise Americans’ utility bills. Mikie Sherrill’s approach is to set statewide ground rules before large data centers connect to the grid. Under legislation she signed in July, the New Jersey Board of Public Utilities must create a separate rate structure for large data centers and ensure that the costs of new substations, transmission lines or other grid upgrades built mainly for the data center, are not added to other customers’ bills.
The law also requires large data centers to commit to paying for at least 85% of the electricity capacity they request for a 10-year period, in case they scale back their power use or close, and it directs regulators to encourage data centers to bring clean generation or energy storage online, use power more efficiently and reduce their electricity demand during emergencies. CHINESE BOT FARM CAUGHT RED-HANDED TRYING TO INFLUENCE HEATED AI DATA CENTER DEBATE Sherrill has paired those ratepayer protections with new disclosure and local-planning measures. A separate law she signed this week requires operators to report their energy and water use to the state twice a year.
Sherrill’s administration says the reporting and new municipal guidance will give officials a clearer picture of data centers’ demands and help communities assess local impacts and negotiate with developers. Meanwhile, Indiana is taking a different approach. Rather than impose statewide rules for every large data center, state regulators approved a deal negotiated by Indiana Michigan Power (I&M), the Fort Wayne-based utility serving customers in Indiana and Michigan, along with consumer advocates and major technology companies.
The deal grew out of a wave of huge planned projects in I&M’s service area. Amazon Web Services (AWS) announced an $11 billion data-center campus near New Carlisle, Indiana, in 2024, while Google announced a $2 billion project in Fort Wayne. I&M and state officials then had to determine who would cover the cost of the additional power and grid infrastructure needed to serve those projects.
FROM NETFLIX TO GPS: 10 WAYS THIS HIDDEN TECH INFRASTRUCTURE QUIETLY POWERS MODERN LIFE According to I&M, the 2025 agreement requires new large customers, including data centers, to make long-term financial commitments to pay for the electric service they request, even if their future demand falls short of expectations. With those commitments in place, I&M says it can turn the new demand into a benefit for existing customers. The utility is now asking regulators to cut base rates by $59 million in 2027, saying revenue from large customers, including data centers, makes the reduction possible.
If the Indiana Utility Regulatory Commission approves the plan, I&M says an Indiana household using 1,000 kilowatt-hours of electricity a month would save about $100 a year. The utility is also proposing to freeze all rates on customers’ monthly bills for three years, with a decision expected in June 2027 and any savings beginning that summer. Daniel Turner, executive director of the energy advocacy group Power The Future, said Indiana’s approach was better than New Jersey’s more prescriptive framework, but argued neither state had gone far enough to ensure the AI buildout adds power to the grid rather than simply consuming it.
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