TRENTON—Last summer, PSE&G bills arrived with a stinger: rates up 20 percent, tracing back to a capacity auction that saw prices explode from $28.92 to $269.92 per megawatt-day. As reported last month, those prices have since hit the FERC-approved cap of $333.44 for 2026/2027. Data centers driving the majority of new load, providing the equivalent to plugging 900,000 homes into a grid already straining against summer peaks.

The phenomenon highlights a contradiction in state priorities. Trenton wants to keep energy costs low for consumers, but cannot resist the potential economic gains from data center contstruction. The contradictions began to crystallize on April 9, when Sherrill joined a bipartisan coalition of 7 governors from states served by PJM Interconnection, which manages the electrical grid in the Mid-Atlantic region.

The coalition includes Illinois Governor JB Pritzker, who demanded in a letter to the grid operator that data centers entering service after July 1, 2027 "cover the full costs they impose on the grid." The letter directs PJM to assign backstop capacity costs directly to new large loads, and mandates that facilities without generation offsets face "mandatory curtailment during system stress events."

Yet the next day, April 10, Sherrill signed legislation lifting New Jersey's de facto moratorium on nuclear construction while maintaining the $250 million tax credit commitment to CoreWeave, a firm building what will be one of the state's largest single electricity consumers.

Kenilworth Data Center Funded by Murphy-Era Policy

In Kenilworth, the former Merck NEST campus, vacant since the pharmaceutical giant downsized, is now a construction zone. CoreWeave is installing server capacity that will require the equivalent electricity. to power 211,000 homes, 24/7. The site also features backup diesel generators and a 50,000-square-foot chiller yard that neighbors fear will hum audibly across the property line. Meanwhile, CoreWeave will collect $50 million annually in tax credits through 2030 under the Phil Murphy-era Next New Jersey Program. That’s funding that Murphy’s successor, Mikie Sherrill, cannot legally revoke.

Kenilworth Planning Board minutes from May 15, 2025, show unanimous approval of the CoreWeave project. Michael Terlizzi, CoreWeave's Senior Vice President for Data Center Operations, testified that the facility would operate 24/7, with 40 operational employees in security, electrical and technical roles. The 392,600-square-foot facility, approved 7-0, promises 143 total jobs, although Terlizzi's 40 operational positions represent the permanent staffing once construction completes.

CoreWeave secured the maximum award under the Next New Jersey Program: $50 million annually for five years, totaling $250 million. Construction began in September 2025, after CoreWeave purchased the facility for $322 million in July 2025.

PJM: The "Fair Share" Debate and Loophole

On January 16, 2026, the PJM Board of Managers issued a Critical Issue Fast Path decisional letter, establishing a framework for screening "duplicative requests" where developers reserve capacity at multiple sites simultaneously. The order created an Expedited Interconnection Track for projects exceeding 250 megawatts.

CoreWeave's Kenilworth facility meets the 250MW threshold, and it offers offers 10-month accelerated processing for up to 10 projects annually. Their contracts with PJM will require a $500,000 study deposit and $10,000 per megawatt in readiness deposits. The January PJM order establishes that data centers may face emergency curtailment, moving to backup generators, during grid emergencies to preserve residential service, though the Board emphasizes such events would be "infrequent."

The timing creates a gap: If CoreWeave hits its "early 2027" target, it could open before Pritzker’s July 2027 threshold, ducking the new cost requirements while keeping the tax credits. Delays would push it into the regulatory net. But PJM keeps slots confidential until contracts are signed. The paperwork currently sits in confidential files at PJM’s headquarters in Audubon, Pennsylvania, where the Critical Issue Fast Path process is administered.

The April 9, 2026 governors' letter represents an escalation from the January framework, demanding specific cost-assignment mechanisms. The coalition, including governors from Pennsylvania, Maryland, Virginia, Illinois and New Jersey, projects that extending the PJM price collar (a $325 per megawatt-day cap) through the 2028/2029 and 2029/2030 auctions will save consumers $27 billion regionally.

Legislative and Gubernatorial Responses

The Legislature has advanced three distinct tracks, which are not mutually exclusive:

• S-3379 (Transparency): Passed the full Senate and cleared the Assembly Telecommunications and Utilities Committee. It mandates biennial reporting of water and electricity usage to the Board of Public Utilities.

• A796/S-731 (Cost Causation): Passed the Assembly 55-18 on March 23, 2026, with a parallel Senate bill in committee since February. Establishes impact fees ensuring that projects causing $100 million in grid costs pay $100 million rather than socializing expenses across ratepayers.

This bill has drawn both praise and fire from state legislators. Assemblyman David Bailey Jr. (D-3rd District) described the mechanism as a "prenuptial agreement" requiring developers to "put your money where [their] mouth is." Assemblywoman Dawn Fantasia (R-24th District) opposed the measure: "We have other states who are actively competing for this investment... We're holding [data centers] to 85% for 10 years. That's the message: Come to New Jersey, we're holding you hostage."

• S-680 (Clean Energy Mandate): Cleared the Senate Environment and Energy Committee on March 19, 2026; the identical Assembly bill remains in committee. Requires new AI data centers to supply their own clean energy; activation depends on a majority of PJM states adopting similar rules.

The Governor’s office has related priorities. These proposed bills come in addition to S-3870, a bill on Nuclear Siting that Governor Sherrill signed on April 10. The legislation lifts the state's moratorium on new nuclear construction and establishes a task force to administer the dormant nuclear plants in Salem County. The legislation potentially enables future power generation to offset data center load, though the statute does not mandate co-location.

Labor and Environmental Tensions

Labor and has generally approved of the data center proposals, though their opinions are not shared by environmental groups. IBEW Local 102 President Bernie Corrigan credited data center construction with making the electrical workers’ union "the strongest we've been from a work perspective" over the past 20 to 25 years. He noted CoreWeave's Kenilworth project as a key driver in that strength. Greg Lalevee of IUOE Local 825 confirmed operators are "working strong" on data center projects.

Conversely, NJ Sierra Club Director Anjuli Ramos-Busot stated that "AI data centers accounted for over 70% of the projected demand during the 2025/26 PJM auction, costs that NJ families are bearing the brunt of." The organization supports S-680's clean energy mandate, which building trades generally oppose. The New Jersey League of Conservation Voters also spoke their piece, urging supporters in a March 16 press release to contact the Assembly to advance S-680, framing it as "critical legislation requiring new data centers to meet strict clean energy" standards.

Moving Forward

As the construction continues apace, CoreWeave's public statements have focused on construction timelines and job creation rather than PJM interconnection specifics or ratepayer impact analyses. Time remains on their side until next July.

The Governor’s office still walks the tightrope between consumer energy prices and commercial data centers. Deputy Press Secretary Maggie Garbarino said the governor "welcomes new opportunities to attract businesses---such as data centers---to our state." Strategic Communications Professional Darwin Pham stated the administration is committed to "ensuring data centers pay their fair share for energy costs."

The Sherrill administration has not commented on the contradictions in these statements. As electricity use will likely increase during the summer months, time will tell which side the Governor ultimately backs.

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Sources

• Matt Friedman, POLITICO New Jersey, "Data center boom poses early challenge for New Jersey's affordability agenda" (April 4, 2026)

• Office of the Governor of Illinois, "Gov. Pritzker Calls on PJM to Ensure Data Centers Pay Their Fair Share" (April 10, 2026)

• American Nuclear Society, "New Jersey moves on from de facto nuclear moratorium" (April 10, 2026)

• Borough of Kenilworth Planning Board, "Special Meeting Minutes" (May 15, 2025)

• Real Estate NJ, "CoreWeave begins $1.8 billion data center project in Kenilworth" (November 25, 2025)

• NJ Business Magazine, "What's Driving Today's Construction Trade?" (April 7, 2026)

• FastDemocracy, "S-731 Senate Concurrence" (March 19, 2026)

• Peter Hall, Pennsylvania Capital-Star, "Grid operator PJM agrees to extension of wholesale electricity price cap" (February 13, 2026)

• Office of the Governor of Maryland, "Governor Moore Secures Win from PJM" (February 13, 2026)

• PJM Interconnection Board of Managers, "Board Decisional Letter on Critical Issue Fast Path" (January 16, 2026)

• Tom Johnson, NJ Spotlight News, "Regulate data centers to prevent higher power rates" (March 31, 2026)

• Rambo Talabong, Inside Climate News, "Amid affordability crisis, New Jersey hands $250 million tax break to data center" (February 26, 2026)

• ROI-NJ, "CoreWeave to take 280K SF space at the NEST in Kenilworth" (October 24, 2024)

• Synapse Energy Economics, "Policy Interventions to Address Rising Electricity Costs in New Jersey" (November 13, 2025)

• Natural Resources Defense Council, "New Jersey Leaders Can Act Now to Cut Rising Energy Bills, New Analysis Finds" (November 13, 2025)

• Anjuli Ramos-Busot, NJ Sierra Club, "Key Legislation to Ensure Data Center Transparency and Energy Affordability Moves Forward in Trenton" (February 12, 2026)

• New Jersey League of Conservation Voters, "New Jersey LCV Interim Applauds Legislative Progress of Bills Protecting Working Families from Data Center Costs" (March 16, 2026)