Governor Kathy Hochul wants large energy users like data centers to cover the cost of connecting to New York’s power grid instead of passing those expenses on to everyday ratepayers.
On Feb. 12, Hochul announced that the New York State Public Service Commission has launched a formal proceeding to review how massive energy users connect to the state’s transmission and distribution systems.
The move advances her Energize NY Development initiative, first unveiled in her State of the State agenda last month. The proceeding will examine interconnection processes, cost-allocation rules and utility tariff structures tied to integrating large energy loads into the grid.
“New York will continue to lead in attracting new technologies, but we must also grow responsibly, ensuring affordability comes first and those profiting from data growth pay their share,” Hochul said. “To prevent rising costs for everyday consumers, the state will enforce a simple standard: these industries must cover the costs of their expansion as it relates to utilities — just the same way it works for everyday consumers.”
State officials say New York has seen a rapid increase in requests from large-load projects, many of them tied to data centers. As of January, the New York Independent System Operator interconnection queue included 48 projects totaling more than 11 gigawatts of new large load.
These projects can require significant grid upgrades and may affect reliability and electric supply. The state argues that without clear rules, those costs could fall on residential and small-business customers.
Hochul said data centers consume large amounts of electricity and place heavy demands on the grid while creating relatively few jobs. Her plan would require projects that drive exceptional energy demand without delivering exceptional public benefits to cover the costs they create. If they do not, they would need to supply their own energy.
The Energize NY Development initiative aims to streamline interconnection rules and provide more transparency around grid upgrades while protecting ratepayers from subsidizing large-scale developments.
Public Service Commission Chair Rory M. Christian said the proceeding will help balance economic growth with consumer protections.
“As energy demand surges across the state, New York State will provide greater certainty and predictability for businesses seeking to invest in New York while ensuring that data centers pay their fair share,” Christian said.
State lawmakers signaled support for the effort. State Senator Kristen Gonzalez said large-scale data centers have strained the energy grid and raised costs for residents. Assemblymember Didi Barrett said the state must ensure communities do not shoulder the costs of growing energy demand.
Next steps include gathering stakeholder comments, holding a technical conference and drafting a white paper with recommendations for the commission’s consideration.
Hochul framed the effort as part of her broader clean energy and affordability agenda, which includes investments in renewable projects, emissions reductions and utility bill relief programs.
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