ALBANY, N.Y. (NEXSTAR) — The New York State Assembly held a hearing on Thursday to examine rising energy costs for everyday utility customers tied to new consumers on the electric grid, like artificial intelligence and cryptocurrency data centers. The Assembly Energy Committee addressed concerns that surging demand from these massive energy users will drive up bills for New Yorkers.

The hearing convened just as a new report from the Climate and Community Institute and Public Grids concluded that the design of electricity rates itself—which prioritizes private profit over universal public service—is the core reason for soaring utility bills. Authored by Isaac Sevier and Roshan Krishnan, “Overcharged: The Rules Of The Electricity Affordability Crisis” said that the data center boom merely aggravates flaws that already plague the broken energy system.

The New York Independent System Operator has estimated that the state could be short some 1,600 megawatts of power by 2030, largely because of demand from these new, large consumers of power. The state’s grid operator has 36 current projects in its interconnection queue, a waiting list potentially representing over 10,000 megawatts of new demand. National Grid alone is reviewing 10 active requests totaling 2.28 gigawatts of new demand, with 65% of that coming from manufacturing or industrial projects and 35% from data centers.

Sevier also warned that one in four New Yorkers struggles to pay their utility bills. He said corporations repeatedly raise rates because they are designed to prioritize their own profits and ignore externalities like pollution. He also underlined the federal government shutdown, costing New York access to financial lifelines like the Supplemental Nutrition Assistance Program and Low Income Home Energy Assistance Program.

“We need to ban utility shutoffs to protect New Yorkers today from the pressures of the extreme costs of living, buying us all more time to work on the core functions of the grid,” Sevier said.

The hearing questioned who should pay for vast infrastructure upgrades necessary to support rising demand from data centers. Representatives from utility companies, the digital infrastructure industry, and the New York State Public Service Commission said companies already pay for the interconnection costs they cause under the state’s current regulatory framework.

Rory Christian, Chair and CEO of the PSC, explained that they follow a “beneficiary pays” principle, meaning large new loads have to cover infrastructure costs they generate so residential customers do not pay the bill. And Javier Cobo, a Vice President at Avangrid—the parent company of New York State Electric and Gas and Rochester Gas and Electric)—agreed, insisting that their costs aren’t passed down to their customers.

But advocates doubted the beneficiary pays principle holds up. Laurie Wheelock, Executive Director of the Public Utility Law Project, suggested that the surge in wholesale power prices and the need for new capital infrastructure to support large users could still affect ratepayers. That’s because, for example, consumption spikes when AI models run, straining the grid and increasing costs on the supply side, while the new infrastructure translates to more capital costs on the delivery side.

Democratic Assemblymember Didi Barrett, Chair of the Energy Committee, cited reports of ratepayers in states like Illinois paying over 91% of the costs incurred by new, large energy consumers. She asked Christian about a reports that ratepayers upstate pay an extra $88 a year because of large-scale cryptomining. She also noted that tech companies like Amazon, Google, Meta, and Microsoft declined to send representation to the hearing despite being invited.

Christian acknowledged that sometimes, required grid upgrade costs are so high they that developers can’t or won’t pay:

Legislators have proposed a new measures that specifically cover large energy users. Barrett said she has a bill, the Accountable Costs for Data Center Act (S8540/A9039A), to create a new customer classification for large energy users like data centers for crypto or AI.

Republican Assemblymember Phil Palmesano, ranking member of the Assembly Energy Committee, questioned utility executives about the hundreds of millions of dollars that utilities collected from ratepayers for the state’s green energy mandates. He alleged that utilities are sitting on this money, which should be used for direct relief by and paying down customers’ high, overdue energy bills before funding green energy.

He also pointed out that unpaid arrears eventually get built into the next rate cases. Palmesano pushed for his legislation (S6412A/A6152A) requiring transparency by making utilities specifically disclose how much of the cost of a utility bill represents a surcharge from such mandates. The PSC and other state agencies would also publicly post that cost breakdown, itemized to include the Climate Leadership and Community Protection Act and programs related to offshore wind, electric heat pumps, or public policy transmission projects.

Advocates testified their backing for the ACDC Act. Elizabeth Moran, policy advocate for Earthjustice, supported the requirement that operations using at least 20 megawatts cover all of the associated costs and sign 10-year contracts to mitigate the risk that they’ll abandon projects. Earthjustice recommended meeting new demand with new, clean, and local energy supplies.

Wheelock pointed out that the specific service class would let the state monitor companies and set rates to accurately reflect the real costs. She added that utilities already include lots of detailed data on bills. That’s why she favored more transparency about how large consumer contribute to the system rather than a breakdown of costs for green mandates. PULP also recommended a dedicated technical panel for large energy users in every rate case.

The hearing also interrogated whether the state can maintain reliable and affordable energy supply. Zach Smith, Senior Vice President for NYISO, said that the New York power grid stands at an inflection point:

Smith owed the grid’s profound challenges to an aging fleet of power plants, the difficulty of building new resources quickly, and the rapid growth of larger energy demands. He warned that new large load connections are likely to outpace construction for generating and supplying power from new sources.

Still, large load users like cryptominers are more flexible than other, traditional industrial energy consumers. Hayley Miller, Director at the Digital Power Network, explained that Bitcoin miners can reduce consumption by over 95% in minutes without harming their operations. And Clint Plummer, CEO of Rise Light and Power, recommended requiring companies to pay for new power projects through long-term purchase agreements.

Tyler Norris, a research fellow at Duke University’s Nicholas School of the Environment, agreed that data center flexibility could exploited for better outcomes, temporarily reducing power when the grid is under strain. He suggested that modest changes, like cutting back power for about 44 hours per year, would let New York handle about four more gigawatts of consumption without any major upgrades. Norris said load flexibility could save hundreds of millions of dollars, since the price of new gas turbines is about $2 million per megawatt.

Utility representatives maintained that new load growth benefits all customers by spreading the fixed costs of the electric grid across a larger base of customers. Matt Barnett, Chief Operating Officer for National Grid’s New York Electric Business, said thoughtful growth helps customer affordability so communities prosper. Joe Halley, Vice President of Regulatory Affairs at Central Hudson, noted that new revenues from large customers usually cover infrastructure costs and can benefit existing customers, because increased sales reduces rates.

But environmental justice advocates said the scramble to meet new demands on the grid would force the state to rely on polluting power plants that damage vulnerable communities. Conor Bambrick, Senior Climate Advisor for the New York City Environmental Justice Alliance, pointed out that many of New York City’s peaker power plants—which only run during hours of high demand—are in disadvantaged communities and cost ratepayers some $400 million or more each year.

Bambrick added community concerns like massive water use for cooling electronics, decreasing water and supply, while increasing water bills in other states. He noted that data centers pose the most significant threat to the state meeting its goals for renewable energy and greenhouse gas emissions. And Moran warned that data centers would erase any of those clean energy gains by forcing the grid to use dirtier, more expensive fuels.

The Climate and Community Institute and Public Grids report suggests overhauling the current system, shifting from investor-owned utilities to public power. The state could use public banks or other public finance authorities and terminate privately held franchise agreements to buy back the grid from private owners. They could reevaluate grid investments as if they were made under public ownership, with a 0% rate of return on equity premium. The goal would be prioritizing electricity as an affordable public good rather than a corporation maximizing shareholder profits, thus keeping costs low for new infrastructure.

Besides New York’s energy burden, the report also details local wealth inequality. The state’s “ultra-rich—households with over $30 million in net worth—hold $6.7 trillion in wealth. Meanwhile, the most vulnerable are under a “high energy burden,” meaning they spend at least 6% of household income on energy. In regions like the North Country and the Bronx, that applies to one in three households.

The report found that New York’s poorest households spend up to 34% of their income on energy on average. As of December 2024, over 1.3 million New York households were 60 days or more behind on utility bills, collectively owing more than $1.8 billion.

Sevier said the discussion around the New York Home Energy Affordable Transition Act helped inform the report. It evaluates the growing gap between the goals of the CLCPA and achieving genuine energy affordability. Take a look at the report below:

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