New Jersey report calls for stronger regulations of AI data centers

SOUTH JERSEY (KYW Newsradio) — More and more AI data centers are being built in New Jersey, raising electricity costs and creating pollution for nearby residents. A new report by a public advocacy group issued recommendations on how to limit the impact on surrounding communities.

Data centers were the main driver of a 20% increase in energy bills last year, according to the report from New Jersey Policy Perspective. By 2030, the report estimates nearly 10% of New Jersey’s entire electrical usage will go to data centers — the equivalent of powering the entire state of Rhode Island.

Author Peter Chen said there must be clear guidelines on how to handle these specific issues, and the state has an obligation to protect residents from any further financial and environmental damages.

“They’re imposing enormous costs on the state and not paying back their fair share,” he said. “There’s no reason that taxpayer dollars should be going to help fund these huge facilities.”

The report offers four main suggestions: Clearly define what a data center is, build guardrails around cost-sharing and transparency, standardize energy load forecasting, and remove government subsidies for the industry.

Jobs are also a problem in the long term, Chen said, as data centers need little manpower to operate day to day.

“The idea that this is the kind of Silicon Valley high-tech job just doesn’t correspond with the reality that we’re seeing in the states that have already expanded — Virginia, Illinois, Texas,” he added.

Virginia, for example, lost $1.6 billion in sales tax revenue, according to the report. New Jersey currently offers up to $500 million in tax credits for data center construction.

“This is not the time to be writing a check to big tech companies for building these data centers in our backyards,” he said.

While lawmakers have been moving legislation to address some data center concerns, Chen challenged them to keep pace with a rapidly changing industry.