Plan to Ensure Data Centers in NYS Pay Their Fair Share for Energy Grid Updates

Proceeding Advances Governor Hochul’s Energize NY Development Initiative

Plan Will Protect Ratepayers While Modernizing How Large Energy Users Connect To The Grid

February 12, 2026

Governor Kathy Hochul announced today that the New York State Public Service Commission (PSC) instituted a proceeding to advance the Energize NY Development initiative she unveiled last month as part of her State of the State policy agenda. The proceeding 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. The goal of this initiative is to support State economic development objectives without adversely impacting ratepayers

“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,” Governor 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.”

Governor Hochul is driving New York’s clean energy transition through major investments, including investments in renewable projects and for building emissions reductions. Key initiatives focus on affordability, such as utility bill relief and expanding the EmPower+ program to help low-income households upgrade to energy-efficient, electric systems.

Unlike other sectors, data centers consume massive amounts of finite resources and place an unprecedented strain on the electric grid without creating many jobs in the process. Governor Hochul is taking action to ensure every day New Yorkers do not subsidize this energy intensive industry. To stop planning uncertainty caused by duplicative interconnection requests and prevent rising costs for everyday consumers, the State will enforce a simple standard: these industries must pay more; if they do not, they must supply their own energy.

To attract responsible new businesses and give them the certainty they need to invest in New York, Governor Hochul tapped the Department of Public Service (DPS), the staff arm of PSC, to launch a new initiative, Energize NY Development, with the goal of modernizing how large energy users connect to the grid, making it faster and more predictable, but with strict conditions to protect ratepayers. This effort will streamline interconnection rules and improve transparency around grid upgrades while explicitly requiring that projects driving exceptional demand without exceptional job creation or other benefits cover the costs they create. By accelerating responsible development and requiring data centers to shoulder their own burden, Energize NY Development will support job creation, industry growth and economic investment across the State while sparing ratepayers additional pressure on utility bills.

New York, like other states, is experiencing a rapid increase in large load requests. As of January 2026, the New York Independent System Operator or NYISO interconnection queue included 48 projects representing a combined total of over 11 gigawatts of new large load. Many of these requests are related to energy intensive industries such as data centers. These large loads potentially impose costs on rate payers in terms of the upgrades needed for their interconnection and the impact it will have on reliability and electric supply.

The saturation of these projects in the interconnection queue, without clarity as to which projects will actually proceed to construction, increases uncertainty and complicates electric system planning and investment decisions. The proceeding will explore possible modifications to interconnection rules, cost allocation structures, and tariffs that would address the impacts of large loads on ratepayers. In terms of next steps, DPS staff will solicit stakeholder comments, hold a technical conference, and develop a white paper outlining recommendations for PSC’s consideration.

New York State Public Service Commission Chair Rory M. Christian said, “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 Senator Kristen Gonzalez said, “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 said, “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.”