New York Governor Kathy Hochul is seeking to shift the financial burden of energy grid upgrades onto data centers and other large energy users, rather than passing those costs on to residential ratepayers. The move comes as demand for power from these facilities rapidly increases across the state.
New Initiative Underway
Governor Hochul announced Thursday that the New York State Public Service Commission (PSC) will review the processes and costs associated with connecting high-energy-demand industries to the state’s power grid. The goal is to modernize grid connections while supporting economic development and protecting consumers from rising energy bills.
Currently, there are more than 130 data centers operating statewide, with roughly half located in the New York City metropolitan area. The state’s grid operators report that the demand for connections is likely to continue growing.
Concerns Over Energy Strain
The increased demand from data centers has the potential to drive up costs for all electricity customers, as upgrades to power generation, transmission, and distribution systems are needed to accommodate the increased load. Governor Hochul stated, “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.”
The initiative would require high-energy businesses to either cover the costs of their expansion as it relates to utilities or supply their own energy. This approach aims to prevent everyday consumers from bearing the financial burden of these upgrades.
One example of a facility facing scrutiny is Greenidge Generation, a cryptomining operation in the Finger Lakes region. The facility has requested an additional 200 megawatts of power, nearly doubling its current capacity, and has faced local opposition. According to filings, Greenidge powers around 20,000 computers while employing fewer than 50 workers and produces nearly 800,000 tons of carbon pollution annually.
Next Steps
The PSC will investigate potential changes to current rules for connecting to the grid and cost structures. The commission is also soliciting public comments and will hold a technical conference to gather recommendations. A bill is currently under consideration by state legislators that would impose a three-year moratorium on permitting new data centers, citing concerns about their consistency with New York’s climate commitments. Similar legislation is being considered in at least five other states.
Frequently Asked Questions
What is the Energize NY Development initiative?
The Energize NY Development initiative is a plan unveiled by Governor Hochul to review interconnection processes, cost-allocation mechanisms, and tariff structures relating to the integration of large energy loads with the state’s transmission and distribution systems.
Why is the state focusing on data centers?
Data centers consume significant amounts of electricity and can strain the grid, potentially driving up costs for other consumers. The state argues that these facilities should cover the costs of their expansion as it relates to utilities.
What is the Public Service Commission’s role in this process?
The Public Service Commission will investigate possible changes to current rules for connecting to the grid and cost structure, as well as the effects of large energy requests. They will also solicit public comments and hold a technical conference.
As energy demand continues to surge, will New York be able to balance the needs of a growing digital economy with the affordability and sustainability of its power grid?
