Navarro proposes data centers cover full grid costs, impacting utilities like PSEG

White House adviser floats forcing data centers to cover full grid costs, a potential shift for utilities

White House trade and manufacturing adviser Peter Navarro is warning that the administration may compel large data center developers to absorb the full costs they impose on local utilities, a move that would directly affect electric companies such as Public Service Enterprise Group (PSEG). Navarro says data centers should pay for the electricity they use plus the resilience and water impacts they create so they "internalize the cost." He does not provide details on how the policy would be implemented, leaving utilities and regulators to weigh operational and regulatory consequences.

For PSEG, which operates generation and distribution networks in New Jersey, such a policy would reshape planning and cost-allocation debates that have intensified as data center demand grows. Requiring data centers to underwrite grid upgrades, added capacity and resilience measures could reduce pressure on residential and small-commercial ratepayers and alter revenue streams that currently fund transmission and distribution investments. The change would also affect how PSEG negotiates interconnection, demand-response arrangements and siting for new transformers and feeders in areas with concentrated data center load growth.

Operationally, the shift prompts utilities to reconsider infrastructure investment and permitting timelines, water-use coordination and emergency back-up planning tied to large, always-on commercial loads. PSEG would need to work closely with state regulators — including the New Jersey Board of Public Utilities — to translate any federal directive into tariff changes, riders or developer-funded infrastructure agreements while balancing reliability, affordability and economic development goals. The lack of an implementation roadmap raises legal and logistical questions about federal authority versus state utility regulation and how cost responsibilities are determined and enforced.

Industry pushback and company responses

Tech firms push back that they already cover costs in many jurisdictions; Meta tells reporters it "pays the full costs for energy used by our data centers" and funds local infrastructure upgrades and added grid capacity. Utilities and developers are likely to enter prolonged negotiations over what counts as incremental cost and which upgrades should be developer-funded.

Political and market context

Navarro’s remarks come amid a 6.9% year‑on‑year spike in electricity prices in 2025 and growing political focus on affordability ahead of the 2026 midterms, with Democrats seizing on rising household costs. The proposal frames utility policy as both an economic and political issue that could reshape how PSEG and peer companies recover the costs of rapidly growing digital loads.