By George Moffatt • Education Chair, Jersey Shore Group
The surge in electricity demand from AI data centers is pushing up the cost of maintaining enough power-generating capacity across the PJM Interconnection grid. In PJM’s latest auction, data-center demand was responsible for an estimated $6.3 billion of the $16.4 billion in capacity costs that customers will ultimately pay—for just the 2028-29 delivery year.
New Jersey is part of a 13-state cluster where electric power utilities sell electricity directly to their customers in a deregulated competitive retail market. The other states are Pennsylvania, Delaware, Maryland, Virginia, West Virginia, North Carolina, Tennessee, Kentucky, Ohio, Indiana, Illinois, and Michigan. The District of Columbia is also in this group.
New Jersey has four electricity distribution and transmission utilities: Public Service Electric and Gas, Jersey Central Power and Light, Atlantic City Electric, and Rockland Electric.
These utilities are connected both to their customers and to PJM’s centralized switching hub. PJM can re-route electricity to any of its member power utilities to relieve power overloads, power failures, or other electrical transmission problems.
The residents of these 13 states and District of Columbia were recently hit with surprising and steep electrical power price increases, announced during the quietude of mid-July during what the electrical industry calls “auctions.”
Auctions enable PJM to calculate the lowest total cost to keep the grid reliable.
But AI companies are frantically building enormous power-consuming computer centers, in their quest to be No. 1. Thus, New Jersey’s electrical power companies are now being enticed, no, pressed to upgrade grid capacity, power lines, substations, and transmission interconnections to meet AI’s increasingly expanding power needs.
AI corporations are swimming in cash—enough to build their own power plants. So why don’t they? Because they are politically adept, and don’t want to pay their fair share of the extra electrical power their AI operations consume. Also, they may feel they don’t have the time to develop new sources of power. In PJM’s interconnection queue, it could take five years or longer to get new plants approved and connected.
As a result, New Jersey’s homeowners and businesses may be forced to pay high fees upfront for the very large power upgrades that only AI needs.
But there is one outcome that everyone but AI will experience—lighter wallets.
Consider some current stats, which tend to be approximate (only AI knows for sure). The total value of the global AI market was $294 billion in 2025 and is projected to grow from $376 billion this year to a whopping $2,480 billion by 2034. These projections could amount to a compound annual growth rate (CAGR) of 26.60%. The US AI market is an estimated $83 billion in 2026, according to Fortune Business Insights.
This raises a question our state legislators should answer: Why are they allowing a major percentage of AI’s unprecedented power costs to be passed on to New Jersey’s other power customers?
The answer is that state regulations require a power company’s regular business and general customers to share in any increased costs of a power company’s expansion to meet expanding demand. But today’s regulations never anticipated electrical users whose power needs can only be described as “voracious.”
Even if AI proves to be our future savior—a reasonably debatable question at the moment—should our state and regional electrical power regulations remain unchanged, forcing all New Jerseyans to subsidize AI?
Perhaps AI can come up with a more equitable solution.
Just a non-AI generated thought.