As data centers race to soak up electricity for artificial intelligence, New Jersey and Indiana have picked opposite strategies to keep the bill from landing on ordinary households.
New Jersey Gov. Mikie Sherrill signed legislation in July requiring the state Board of Public Utilities to create a separate rate structure for large data centers. The law bars utilities from spreading the cost of new substations, transmission lines or other grid upgrades built mainly for a data center onto everyone else’s bill. Large data centers must also commit to paying for at least 85% of the electricity capacity they request over a 10-year period, even if they later scale back or shut down. Regulators are directed to push data centers toward clean generation, energy storage, efficiency, and reduced demand during emergencies.
Sherrill followed that up this week with a separate law requiring data center operators to report their energy and water use to the state twice a year, part of a broader push for disclosure and local planning input.
Indiana went a different route. Rather than write statewide rules, regulators approved a negotiated deal between Indiana Michigan Power (I&M), the Fort Wayne-based utility serving Indiana and Michigan, consumer advocates, and major tech companies. The deal was forced by scale: Amazon Web Services announced an $11 billion data-center campus near New Carlisle, Indiana, in 2024, and Google announced a $2 billion Fort Wayne project the same year.
Under the 2025 agreement, new large customers, including data centers, must make long-term financial commitments to pay for the power they request, even if demand later falls short. I&M says that commitment lets it turn new data-center demand into savings for existing ratepayers. The utility has asked regulators to cut base rates by $59 million in 2027, and says an Indiana household using 1,000 kilowatt-hours a month would save roughly $100 a year if the plan is approved. I&M is also proposing a three-year freeze on customer rates, with a decision expected in June 2027 and savings starting that summer.
Which approach actually works
Daniel Turner, executive director of the energy advocacy group Power The Future, told Fox News Digital that Indiana’s model beats New Jersey’s, though he said neither state has gone far enough to make sure the AI buildout adds power to the grid instead of just draining it.
“Indiana’s approach is definitely the better of the two,” Turner said. “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 generation capacity should be built into every deal from day one. New Jersey’s law encourages, but does not require, clean generation or storage alongside new data centers.
“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 argued data centers have turned into a political football, with officials too often reaching for blanket restrictions or indefinite delays instead of negotiating plans that protect ratepayers while adding real generation capacity.
“The solutions to data centers are not complicated issues to solve,” he said. “They just require political will.”
The federal angle
The Trump administration has pushed its own version of this fight nationally. 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 those companies to cover the added electricity generation costs for AI data centers instead of passing them to households.
Turner tied the debate to broader competition with China, saying the U.S. cannot afford to fall behind in the AI race.
“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.”
Data center fights are already playing out on the ground. In Michigan, protesters demonstrated near President Trump’s speech at the General Motors Proving Ground in Milford. In Utah, the Box Elder County Commission approved a proposed 40,000-acre AI data center project in Tremonton in May over objections from activists concerned about water use, energy demand and environmental impact. Data center development is also surging in Texas, where North Texas recently topped a global ranking of leading markets for the industry.
