Senate Bill S10546

                                 
BILL NUMBER: S10546

SPONSOR: GONZALEZ
 
TITLE OF BILL:

An act in relation to requiring host community benefits

 
PURPOSE OR GENERAL IDEA OF BILL:

This bill requires large data centers and major expansions of existing
data centers to provide direct benefits to the communities in which they
are located, either through utility bill relief or investments in resi-
dential energy technologies.

 
SUMMARY OF PROVISIONS:

The bill defines key terms including "data center," "host community,"
"eligible residential technologies," and "utility." It requires any new
data center, or any existing data center undergoing a major expansion
that adds at least 20 megawatts of load, to fund a host community bene-
fit program. These programs must either:

              

1. Provide discounts or credits on residential electric utility bills in
the host community; or

2. Install eligible residential technologies, such as heat pumps, roof-
top solar, or battery storage systems.

The Public Service Commission (PSC) is directed to initiate a proceeding
within 90 days to establish the framework for these programs. The PSC
will determine program details, including funding levels and implementa-
tion, and must incorporate community input regarding preferred benefits.

The bill prioritizes benefits for low- and moderate-income households
and disadvantaged communities. Additionally, the Long Island Power
Authority (LIPA) is required to establish a comparable program within
its service territory.

The act takes effect 180 days after becoming law, with rulemaking
authorized immediately.

 
JUSTIFICATION:

The rapid expansion of large-scale data centers is fundamentally reshap-
ing New York's energy landscape, with significant consequences for elec-
tric grid reliability, ratepayer costs, and the State's climate goals.
According to the New York Independent System Operator's 2025 Power
Trends report, electricity demand in New York is projected to increase
by as much as 4,000 megawatts by 2030, driven largely by new large-load
customers such as data centers and increased electrification. This
represents an increase of approximately 1,600 megawatts beyond prior
forecasts, requiring substantial new investment in generation and trans-
mission infrastructure. These costs are typically socialized across all
ratepayers, meaning residential customers and small businesses may bear
the financial burden of infrastructure needed to serve a relatively
small number of high-demand users. Data centers, fueled by the growth of
artificial intelligence, machine learning, and digital services, are
among the most energy-intensive types of development.  Nationally, data
center electricity consumption is projected to grow rapidly, potentially
surpassing the equivalent usage of tens of millions of households within
the next decade. In New York alone, projections suggest that data center
demand could increase by more than 9,000 megawatts in coming years. That
is comparable to the total electricity consumption of all households in
the State. This surge in demand has real cost impacts. A Bloomberg anal-
ysis found that 70 percent of locations experiencing year-over-year
wholesale electricity price increases were located within 50 miles of
major data center activity. At the same time, national household elec-
tricity rates rose by approximately 13 percent in 2025, due in signif-
icant part to infrastructure and generation pressures associated with
data center growth. Beyond cost impacts, data centers also pose environ-
mental and infrastructure challenges. A majority of the electricity used
by data centers (estimated at roughly 56 percent) continues to come from
fossil fuels, resulting in a carbon footprint significantly higher than
the grid average. Even when renewable energy is procured, it can
displace clean energy that would otherwise serve broader decarbonization
efforts, delaying the retirement of fossil fuel generation. Data centers
also require significant water resources for cooling and generate
substantial electronic waste due to rapid hardware turnover. Host commu-
nities bear many of these localized impacts, including increased grid
strain, land use changes, and environmental externalities, without
necessarily receiving direct or proportional benefits. At the same time,
low- and moderate-income households in these communities are particular-
ly vulnerable to rising energy costs. This bill addresses these chal-
lenges in a targeted and balanced manner by requiring large data centers
(defined as facilities with a peak demand of 20 megawatts or more) to
fund direct benefits for the communities in which they are located.
Rather than shifting costs onto ratepayers, the bill ensures that these
large energy users contribute to mitigating their local impacts. Specif-
ically, the legislation requires data center developers to fund programs
that either (1) provide direct utility bill credits to residential
customers in host communities or (2) invest in eligible residential
technologies such as heat pumps, rooftop solar, and battery storage.
These measures not only offset cost pressures but also support energy
efficiency, electrification, and emissions reductions consistent with
New York's climate goals. By prioritizing low- and moderate-income
households and allowing host communities to determine their preferred
folin of benefit, the bill promotes both equity and local decision-mak-
ing. It ensures that the economic and technological growth associated
with data centers does not come at the expense of the communities that
host them. In doing so, this legislation strikes a practical balance: it
allows continued development of critical digital infrastructure while
protecting ratepayers, supporting clean energy goals, and delivering
tangible benefits to impacted communities.

 
LEGISLATIVE HISTORY:

New bill.

 
FISCAL IMPLICATIONS:

None to the State.

 
EFFECTIVE DATE:
This act shall take effect on the 180th day after it becomes law, with
certain provisions related to rulemaking taking effect immediately.