New Jersey Governor Mikie Sherrill claims that data centers are “among the biggest drivers of energy costs” and has announced a statewide plan to make them bring “new clean energy” online, report energy and water use, and pay more for grid infrastructure. But data from the U.S. Energy Information Administration (EIA) contradict Gov. Sherrill’s claims about data centers. New Jersey and similar states have seen rates increase, not because of data centers, but because they have weak electricity demand, high renewable-policy costs, expanding net metering and distributed solar, and the retirement of dispatchable power plants.
Governor Sherill needs to read our recent report on data centers and electricity prices. We found that there is no statistically significant correlation between the number of data centers in a state and either current electricity prices or the rate of electricity price increases across states. In fact, prices in the top ten data center states are virtually identical to the average across other states.
We found that there was a significant correlation between electricity sales and lower increases in electricity rates and faster increases in prices and falling electricity sales. This finding actually explains what is happening in New Jersey.
If data centers were driving New Jersey’s electricity-cost crisis, statewide electricity sales would be surging. They are not. New Jersey’s electricity sales are falling. New Jersey retail electricity sales fell from 75.4 TWh in 2016 to 73.1 TWh in 2025, a decline of about 3%. Compared with 2010, when New Jersey used 79.2 TWh, demand is down about 7.7%. New Jersey currently has 82 data centers, but it still has falling electricity demand, while prices continue to rise.
According to the most recent data from EIA, New Jersey’s residential electricity price is 23.49 cents/kWh, making it the 13th-highest priced state and 25% above the U.S. average. From 2016 to 2025, New Jersey’s nominal electricity price rose from 13.38 to 18.84 cents/kWh, a 40.8% increase.
The actual cost drivers are hiding in plain sight. New Jersey’s Renewable Portfolio Standards (RPS) compliance cost rose from 0.78 cents/kWh in 2016 to 1.94 cents/kWh in 2024, equal to 11.9% of the average bill. New Jersey’s net-metering penetration rose from 2.17% of retail sales in 2016 to 6.42% in 2025, while small-scale solar rose from 1.78% to 6.27% of in-state generation.
At the same time, New Jersey has been retiring dispatchable power plants. PJM reports that Mercer 1, Mercer 2, and Hudson 2 (all coal plants) were deactivated on June 1, 2017, totaling roughly 1,259 MW of capacity. New Jersey also lost unit 1 at BL England power station in 2014 and unit 2 in 2019, totaling an additional 300 mw of coal power. In 2022, New Jersey’s Board of Public Utilities approved agreements closing facilities owned by Chambers Cogeneration Limited and Logan Generating Company, the last two coal-fired electricity generation units in New Jersey.
New Jersey has lost more than coal power. In 2018, New Jersey saw the retirement of the 625 MW Oyster Creek Nuclear Generating Station. It was a 625 MW nuclear plant and at the time it retired, EIA reported that in “2017, Oyster Creek generated 5.4 million megawatt hours of electricity, or almost twice as much as all of the solar photovoltaic systems in New Jersey.”
All of these retirements are important context that Governor Sherrill omits. New Jersey is not suffering from an uncontrolled statewide demand surge. It is a high-cost state with declining electricity sales, expensive RPS compliance, aggressive net-metering exposure, growing distributed-solar cost shifting, and a long list of retired dispatchable power plants.
Data centers should pay the direct costs they impose. But blaming them for New Jersey’s current electricity-rate problem is wrong. The problem is not data centers, but years of bad policy.
