New Jersey is moving forward with new requirements governing the electricity costs and grid impacts of large data centers. On October 19, 2026, the New Jersey Board of Public Utilities (“BPU”) issued a request for information (“RFI”) concerning implementation of the Data Center Fair Share Act (Docket No. EO26080463).
The law, P.L. 2026, c.32, was approved July 7, 2026, and took effect immediately. It is intended to ensure that other utility customers do not subsidize large data center customers and that costs attributable to those customers are allocated to them. BPU must establish implementing standards by order within 12 months of the law’s effective date, and each electric public utility must then petition for approval of a new rate class and tariff within 180 days after BPU issues its standards. The RFI seeks stakeholder input; it does not establish a final tariff.
For developers, owners and contractors, the practical issue is how to account for these requirements in projects being financed, designed and contracted today.
1. Determine which facilities and capacity commitments are covered.
The law leaves BPU to define covered customers for each utility, with a minimum size threshold no greater than 50 megawatts. BPU must aggregate the peak monthly energy demand of data centers that are under common ownership or control, located on the same or contiguous sites, or share substantial physical, operational or interconnection infrastructure. The standards must also address evasion through corporate structuring, project segmentation, behind-the-meter configurations and off-tariff arrangements. Dividing a campus among buildings, meters or project entities should not be assumed to avoid coverage. Applications for new or expanded service pending when the approved tariff takes effect will generally be subject to that tariff when service commences.
A large data center approved by a utility to receive service before July 7, 2026, is exempt from the financial-guarantee, deposit and security, and study-cost requirements for the previously approved megawatts. This is not a blanket exemption from the law; such facilities remain subject to cost-allocation, demand-reduction and demand-flexibility requirements, although BPU may phase in the cost allocation. The exemption is not diminished by renewal, extension or amendment of the service agreement, but it does not extend to service above the approved quantity. Owners should preserve their utility approvals and distinguish existing approved capacity from proposed expansion.
2. Allocate utility upgrade costs before fixing the construction price.
The proceeding addresses recovery of attributable grid-upgrade and study costs. These costs can affect a project’s budget and scope before construction begins.
Project agreements should identify who commissions studies, funds utility improvements, approves changes and bears cost escalation. Contractor-installed electrical work should be distinguished from utility-owned infrastructure. If required upgrades remain undefined, allowances or a later pricing milestone may be more appropriate than incorporating preliminary estimates into a fixed-price obligation.
Contracts should also address the consequences of utility requirements that change equipment selection, site design or construction sequencing.
3. Coordinate power requests with realistic development schedules.
The statute calls for guarantees covering payment for at least 85 percent of requested electricity supply for 10 years from service commencement, or as otherwise determined in BPU’s standards. It also calls for deposits, financial security or, for customers with sufficiently high credit ratings, financial commitments, and authorizes a stranded cost recovery mechanism applicable only to the large data center customer class. The RFI seeks input on ramp-up periods, creditworthiness and security, and termination payments.
These details are particularly important for phased developments. Requested capacity should reflect credible occupancy and commissioning schedules. Financing documents, leases and construction agreements should identify who bears the resulting exposure if the facility opens late or consumes less power than anticipated. A construction delay should not be assumed to postpone a separate utility payment obligation.
4. Account for curtailment in design and performance obligations.
The law directs BPU to ensure priority curtailment of large data center customers before residential customers during system emergencies, excluding designated critical load, and treats any such curtailment as firm load shed. Large data center customers must also make demand-flexibility commitments, which may include curtailment commitments or performance standards with financial penalties. The implementation proceeding seeks input on critical-load designations, operating controls, testing and penalties. BPU’s standards will also need to function alongside any regional curtailment program that PJM may develop; FERC rejected PJM’s proposed Interim Resource Adequacy Service framework on October 9, 2026, and the form of any refiled framework remains uncertain.
Owners and design teams should evaluate how load reductions could affect cooling, backup systems, commissioning and tenant commitments. Construction and equipment contracts should distinguish ordinary operating requirements from performance during a required curtailment. Backup generation should not be assumed to eliminate every operational or permitting constraint.
5. Address energization risk expressly.
Completing the building does not necessarily mean that utility service is available or that the facility can begin commercial operation.
Contracts should address utility coordination, energization prerequisites, commissioning dependencies and responsibility for delayed utility work. Parties should also review how subsequent standards and tariff terms interact with change-in-law provisions, extensions of time, liquidated damages and termination rights.
These are practical contracting considerations, not additional construction mandates imposed by the RFI. Addressing them expressly can reduce disputes over risks that otherwise remain embedded in broad completion and performance obligations.
Next steps
BPU’s virtual stakeholder meeting is scheduled for November 4, 2026, from 10 a.m. to noon; registration is requested at least 48 hours in advance, including for those wishing to reserve a speaking slot of up to three minutes. Written responses are due November 13, 2026, at 5:00 p.m., and should be filed under Docket No. EO26080463. Developers, owners and contractors should consider whether to provide input on financing, phased development and realistic energization schedules while the implementation framework is being developed.
Sources: NJBPU Request for Information; Enacted Data Center Fair Share Act
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