Illinois Governor JB Pritzker is proposing a temporary halt on state tax incentives for data centers, a move aimed at addressing concerns over soaring electricity bills for residents. During his annual budget address, the governor announced his plan for a two-year moratorium on new tax credits for the industry.
The governor also called on PJM Interconnection, the nation’s largest electric grid operator, to ensure that large energy consumers like data centers contribute their fair share to the cost of maintaining a reliable power supply. This issue has gained urgency as energy demand surges from widespread adoption of electric vehicles, smartphones, and artificial intelligence tools.
“We need to think critically about our future energy usage with the needs of Illinois households at the forefront,” Pritzker said. “In the face of rising demand and surging prices, I’m proposing a two year pause on authorization of new data center tax credits. With the shifting energy landscape, it is imperative that our growth does not undermine affordability and stability for our families.”
Pritzker pointed to previous collaborative efforts with other states in the PJM region to speed up the connection of renewable energy projects. He specifically urged the grid operator to “force data center developers to pay for capacity resources to power their operations.”
A spokesperson for PJM stated that the organization is actively working with state leaders to address the supply and demand imbalance driving up wholesale electricity costs. “PJM is also working with states and the utilities they regulate to require data centers and other new large electricity consumers to bring their own new generation to power their facilities, or be subject to curtailment in times of system emergencies,” the spokesperson said. They added that allocating costs to specific customer groups ultimately falls to individual states, not the grid operator.
The governor’s proposal was met with mixed reactions. A coalition focused on clean jobs welcomed the move as a necessary step to protect consumers from “skyrocketing” bills. However, a local business group expressed concern that pausing the incentives would eliminate a proven tool for economic development.
If approved by the state legislature, the pause on new data center tax credits would begin with the start of the new fiscal year on July 1. The program, which started in 2019, has led to the construction of 37 projects. The two-year halt would allow the state to study the program’s effectiveness and its impact on state revenue. A vote on the overall budget proposal is expected before June.
