Families and small businesses across New Jersey are paying higher electric bills to subsidize the explosive growth of AI data centers, according to a new report from New Jersey Policy Perspective released today.
The report, “Fool’s Gold: The Hidden Costs of AI Data Centers for New Jersey,” finds that data centers were the main driver of the 20 percent jump in electric bills that New Jerseyans experienced in June 2025. By 2030, nearly 10 percent of New Jersey’s entire electrical usage will go to data centers, or the equivalent of powering the entire state of Rhode Island.
“New Jersey families are getting hit twice,” said Alex Ambrose, NJPP Senior Policy Analyst and report co-author. “They’re paying more each month to subsidize data center expansion, and they’re breathing dirtier air because these facilities are keeping polluting power plants running. Meanwhile, the companies building these data centers are getting tax breaks and walking away with the profits.”
The report finds that data center growth imposes serious costs: higher utility bills, increased air pollution in environmental justice communities, strain on water resources, and minimal long-term job creation despite state subsidies.
A typical large AI data center uses as much energy as 100,000 households. During the 2025-26 capacity auction, AI data centers accounted for nearly 70 percent of the increase in demand, driving the 20 percent electric bill spike. Utilities are passing infrastructure upgrade costs to households and small businesses with no protections in place.
The environmental costs fall hardest on communities already facing pollution burdens. More than half of all coal and gas plants in the regional grid are within a mile of an environmental justice community. In Vineland, a proposed data center plans to use diesel backup generators in a community where residents already experience asthma, heart disease, and lung cancer at rates higher than the state average.
Despite promises of economic development, a 250,000 square-foot data center employs about 50 people after construction ends. By comparison, warehouses generate one job for every 600 square feet.
States are losing billions in subsidies. Virginia lost $1.6 billion in sales tax revenue, more than 20 percent of its total. New Jersey’s Next New Jersey program offers up to $500 million in tax credits for AI data center construction.
The report recommends four policy-based solutions:
- create a standard regulatory definition of data centers;
- require companies to pay higher rates and report energy use publicly;
- standardize load forecasting to prevent inflated projections;
- and remove or restrict state subsidies.
“The path forward is clear,” said Ambrose. “Stronger rules, cleaner energy, and a commitment to putting people before corporate profits.”
The full report is available at njpp.org.
