Gov. Kathy Hochul is proposing to make artificial intelligence companies and large data centers pay more for electricity in New York, arguing their fast-growing power needs are straining the grid and helping drive higher utility bills for households and small businesses.
Hochul plans to lay out the proposal Tuesday in her 2026 State of the State address in Albany.
Under the plan, she would ask the state Public Service Commission to establish an "Energy NY Development" program aimed at managing the rapid growth of energy-intensive industries, such as AI and cloud computing.
"Massive data centers are driving up electricity demand faster than the grid can keep up, pushing costs onto working families and small businesses who can't afford higher bills," Hochul said in a statement previewing the initiative.
The proposal would offer large power users a clearer pathway to connect to the grid, state officials said, but only under conditions intended to protect other ratepayers.
Companies seeking major new electric loads would be required to pay higher rates tied to the costs they impose on the system or supply their own power, according to Hochul's office. The PSC would be tasked with setting the pricing structure and related rules.
The plan arrives as New York confronts rising concern about affordability and reliability in a power system being asked to serve growing demand while meeting aggressive climate targets.
The New York Independent System Operator, which runs the state's bulk electric grid, has warned that reliability violations could begin in New York City and on Long Island as soon as this coming summer, citing rising demand, generator deactivations, and transmission limitations.
The operator's short-term assessment examined conditions from mid-2025 through mid-2030 and urged attention to near-term reliability concerns.
Advocates for the policy say the electricity-hungry buildout of AI and data centers is creating a new challenge for regulators who traditionally plan infrastructure around slower demand growth.
The governor's office framed the initiative as a way to promote economic development while preventing the costs of new substations, transmission upgrades and other grid investments from being shifted onto residential and small-business customers.
Hochul, a Democrat expected to seek another term in 2026, has increasingly emphasized energy affordability and reliability as she navigates implementation of the state's landmark 2019 climate law.
The Climate Leadership and Community Protection Act requires New York to cut economywide greenhouse gas emissions 40% by 2030 and at least 85% by 2050 compared with 1990 levels.
In recent years, Hochul has signaled a willingness to adjust or sequence major initiatives amid worries about utility bills and supply constraints.
She delayed a proposed "cap-and-invest" program that would have put a price on emissions and generated revenue for climate investments, drawing criticism from some lawmakers and environmental groups.
The governor has also highlighted an "all-of-the-above" approach to maintaining reliability as the state adds renewable generation, upgrades transmission, and contends with aging infrastructure, particularly in the downstate region where demand and reliability risks are most acute.
Theodore Bunker ✉
Theodore Bunker, a Newsmax writer, has more than a decade covering news, media, and politics.
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