Gov. Hochul announces plan that ensures data centers help pay for electric grid upgrades

New York (WRGB) — Governor Hochul announced that the New York State Public Service Commission (PSC) has launched a formal proceeding tied to her Energize NY Development initiative, a plan aimed at ensuring large energy users, including data centers, pay their fair share for electric grid upgrades while protecting everyday ratepayers.

The proceeding will review how major energy users connect to the state’s transmission and distribution systems, including interconnection processes, cost-sharing rules, and tariff structures. State officials say the goal is to modernize grid connections in a way that supports economic development without shifting costs onto residential customers.

Hochul said in a statement,

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. 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 data centers consume significant electricity and can strain the grid without generating large numbers of jobs. Under the Energize NY Development initiative, projects that create exceptional demand would be required to fund the infrastructure upgrades they trigger or provide their own energy supply.

The Department of Public Service (DPS), the staff arm of the PSC, was directed to lead the initiative. The effort is intended to streamline interconnection rules, improve transparency around grid upgrades, and provide businesses with clearer timelines, while explicitly protecting ratepayers from added financial burdens.

According to the New York Independent System Operator (NYISO), as of January 2026 there are 48 large-load projects in the interconnection queue representing more than 11 gigawatts of potential new demand. Many of those projects are tied to energy-intensive industries such as data centers. Officials say uncertainty over which projects will ultimately be built complicates long-term electric system planning.

As part of the proceeding, DPS staff will gather stakeholder input, host a technical conference, and prepare a white paper with recommendations for the PSC.

PSC Chair Rory M. Christian said the review is designed to create greater certainty for businesses investing in New York while ensuring that high-demand users shoulder appropriate costs, stating,

The Commission instituted this proceeding to advance the Energize NY Development initiative, which will review interconnection processes, cost-allocation mechanisms, and tariff structures relating to the integration of large loads with the State’s transmission and distribution systems. 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.

State lawmakers welcomed the move. Senator Kristen Gonzalez said holding large data centers accountable is an important step toward protecting consumers and meeting climate goals, stating,

Large scale data centers and their big tech owners are polluting our air, straining our energy grid, and raising the utility rates for New Yorkers already struggling amidst an affordability crisis. The Governor’s announcement to hold data centers accountable for their share of energy costs is a significant step towards meeting our climate goals and protecting consumers. I look forward to continue working with the Governor to pass legislation addressing the impact of data centers in our state.

Assemblymember Didi Barrett called the initiative timely and said she hopes regulators will consider options such as creating a new rate class for large energy users, stating,

The Energize NY initiative couldn’t be more timely. The proliferation of data centers and other large energy users can be seen across the country and are growing in New York State, so we must have policies in place that will protect ratepayers and communities from being saddled with their costs and demands for water and electricity. I hope the PSC will consider a range of options during this proceeding, including creating a new rate class for large energy users to ensure that data centers pay their fair share.