Hochul Administration Targets Data Center Energy Costs, Seeks Grid Upgrade Funding Shift

Albany, NY – New York Governor Kathy Hochul is taking aim at the growing energy demands of data centers, initiating a plan to shift the cost of grid upgrades from everyday ratepayers to the tech companies themselves. The move comes amid concerns that the surge in data center construction is straining the state’s power grid and driving up electricity prices for residents.

Growing Demand and Grid Strain

Demand for data centers, fueled by cloud storage, cryptomining, and artificial intelligence, is rapidly increasing across New York State. As of last month, 48 projects were requesting connections to the grid, totaling over 11 gigawatts – enough power for approximately 11 million households, according to state grid operators. Currently, there are more than 130 data centers statewide, with nearly half located in the New York City metropolitan area, according to Data Center Map.

Hochul’s Plan: Energize NY Development Initiative

Governor Hochul announced on February 12, 2026, that the New York State Public Service Commission (PSC) has launched a formal proceeding tied to her Energize NY Development initiative. This initiative aims to ensure large energy users, including data centers, contribute their fair share to the costs of electric grid upgrades. The PSC will review interconnection processes, cost-sharing rules, and tariff structures to modernize grid connections without burdening residential customers.

Addressing Affordability Concerns

“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 stated. “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.”

Concerns About Energy Consumption and Job Creation

The Hochul administration has expressed concern that data centers consume significant electricity without generating a substantial number of jobs. For example, the Greenidge Generation facility, a cryptomining operation in the Finger Lakes, powers approximately 20,000 computers while employing fewer than 50 workers. The facility also produces nearly 800,000 tons of carbon pollution annually, equivalent to the emissions of 170,000 cars.

Legislative Considerations and Ongoing Debate

The PSC’s investigation will focus on potential changes to grid connection rules and cost structures, as well as the impact of large energy requests. The commission is seeking public comments and will hold a technical conference to develop recommendations. Simultaneously, state legislators are considering a bill that would impose a three-year moratorium on permitting new data centers, arguing that their growth is inconsistent with New York’s climate commitments. Similar legislation is being considered in at least five other states.

Utility Compensation Audit

This move to address data center costs comes as Governor Hochul also directs an audit of utility company salaries. On February 13, 2025, the New York State Public Service Commission initiated a comprehensive review of utility management compensation, following the Governor’s direction to the Department of Public Service to move forward with the audit. The audit seeks to align utility priorities with state objectives, including affordability and reliability. Critics suggest that rising utility costs are also driven by the state’s green energy initiatives.