Governor Kathy Hochul announced that the New York State Public Service Commission (PSC) has started a proceeding to advance the Energize NY Development initiative. This move follows her recent State of the State policy agenda and aims to review how large energy users, such as data centers, connect to the state’s electric grid. The PSC will examine interconnection processes, cost allocation methods, and tariff structures for integrating these large loads into New York’s transmission and distribution systems. The goal is to support economic development while protecting everyday consumers from increased utility costs.
“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.”
The governor’s administration has invested in renewable energy projects and initiatives aimed at reducing building emissions. There are also programs focused on making energy more affordable for residents, including utility bill relief efforts and upgrades for low-income households through expanded access to energy-efficient electric systems.
Data centers use significant amounts of electricity and put extra strain on the power grid without creating many jobs. To address this issue, Governor Hochul stated that these businesses should not be subsidized by ratepayers. She emphasized that if data centers do not pay higher rates to cover their impact on the grid, they would need to supply their own energy.
The Department of Public Service (DPS), which supports the PSC, was tasked with launching Energize NY Development. This initiative seeks to modernize how large users connect to the grid by making connections faster and more predictable while requiring those with high demand but limited job creation or other benefits to cover associated costs. The plan is intended to encourage responsible business investment in New York while protecting ratepayers from additional utility bill increases.
As of January 2026, there were 48 projects totaling over 11 gigawatts of new large load requests in New York’s interconnection queue—many linked to data centers and similar industries. These projects could require expensive grid upgrades and affect reliability and electric supply for other customers.
Uncertainty about which projects will proceed complicates planning for utilities and investments in infrastructure. The PSC proceeding will consider changes to rules around connecting large loads, how costs are shared among users, and possible new tariffs designed specifically for these types of customers. Next steps include gathering input from stakeholders, holding a technical conference, and preparing recommendations for further action.
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 commented on environmental concerns related to data centers: “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 added: “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.”