BILL NUMBER: S8546
SPONSOR: MAY
 
TITLE OF BILL:
An act to amend the public service law and the public authorities law,
in relation to establishing a grid modernization surcharge; and to amend
the state finance law, in relation to establishing the grid moderniza-
tion fund
 
PURPOSE OR GENERAL IDEA OF BILL:
To ensure that large data centers, whose significant electricity
consumption strains New York's electrical grid and contributes to rising
energy costs, bear a fair share of the cost of modernizing and maintain-
ing that grid.
 
SUMMARY OF PROVISIONS:
The bill adds a new section 66-x to the Public Service Law directing the
Public Service Commission to establish a grid modernization surcharge
collected by electric corporations from large data centers based on
energy usage. Revenues will be deposited into a new Grid Modernization
Fund under the State Finance Law, used exclusively for grid reliability,
capacity expansion, and clean energy integration.
The Public Authorities Law is amended to require the New York Power
Authority to impose and remit an equivalent surcharge on data center
customers it serves, consistent with PSC regulations.
The bill prohibits utilities from passing any surcharge costs to other
customer classes and requires annual public reporting on collections,
disbursements, and measurable grid improvements.
The act takes effect one year after becoming law.
 
JUSTIFICATION:
The exponential growth of energy demand from data centers, driven by
artificial intelligence and cloud computing, strains our electrical
grids, creates a disproportionate use of resources, and leads to higher
energy costs for households and small businesses. The immense increase
in demand for electricity boosts wholesale energy market prices, espe-
cially during peak demand periods. This affects all customers, as utili-
ties often pass these higher generation costs on to everyone.
Further, data centers use millions of gallons of water per day for cool-
ing, creating additional environmental stress. As one of the few states
with abundant clean fresh water, New York is a particularly appealing
location for these centers and must be prepared to take action to
control the use of this vital resource.
At the same time, much of the state's electric grid is aging and
increasingly constrained. Upgrades to substations, feeders, and trans-
mission lines are urgently needed to maintain reliability and accommo-
date renewable generation. Yet, without targeted funding, those costs
would otherwise fall to residential and small business ratepayers.
This legislation ensures that the largest consumers of electricity, the
very entities driving demand for new infrastructure, contribute equit-
ably to maintaining and strengthening the system they rely on. By
establishing a surcharge based on usage and creating a dedicated Grid
Modernization Fund, the bill enables New York to meet the demands posed
by data center growth while holding those facilities financially
accountable for their extraordinary energy needs. It may also encourage
data center operators to invest in and build their own clean energy
infrastructure, reducing strain on the statewide grid.
 
PRIOR LEGISLATIVE HISTORY:
New bill.
 
FISCAL IMPLICATIONS:
To be determined.
 
EFFECTIVE DATE:
This act shall take effect one year after it shall have become a law.

Statutes affected:
S8546: eighty-five state finance law