Pritzker Suspends Data Center Tax Incentives Amid Rising Energy Costs

Illinois Governor JB Pritzker is taking decisive action to address the rising power bills affecting consumers by proposing a temporary halt on incentives for data centers.

Pritzker, a Democrat running for his third term, announced his plan during a recent budget address. He aims to implement a two-year moratorium on new state-issued tax credits for data centers, while also urging PJM Interconnection LLC, the largest grid operator in the U.S., to ensure that large energy consumers like data centers contribute fairly to the grid.

As the demand for electricity surges due to the increasing use of smartphones, electric vehicles, and artificial intelligence, ensuring a reliable electricity supply has become paramount. However, concerns are growing over who will bear the costs associated with powering data centers, especially as energy bills for American households continue to rise.

“We need to think critically about our future energy usage with the needs of Illinois households at the forefront,” Pritzker stated. “In the face of rising demand and surging prices, I’m proposing a two-year pause on the 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 highlighted the collaborative efforts he and other governors have made to push for changes from PJM, which serves 13 states, including New Jersey and Pennsylvania, as well as parts of northern Illinois. These efforts have included expediting interconnection times for renewable energy projects. He also called on PJM to require data center developers to cover the costs of capacity resources necessary to power their operations.

“We are actively working with all the governors in our footprint on multiple fronts to address the supply/demand imbalance that is driving up wholesale electricity costs,” stated Jeffrey Shields, a PJM spokesperson. “PJM is also collaborating with states and the utilities they regulate to require data centers and other large electricity consumers to either generate their own power or face curtailment during system emergencies.”

Shields added that PJM is taking steps to expedite connections for new projects. Additionally, PJM’s board has extended the price cap for another two years, a move aimed at stabilizing prices for consumers. He noted that Pritzker and the Illinois Commerce Commission are “fully engaged at all levels” in these discussions.

“Cost allocation to specific customer classes is in the hands of states, not PJM,” Shields clarified.

Illinois is not alone in its efforts to manage rising power costs. New Jersey’s new governor, Mikie Sherrill, recently issued executive orders declaring a state of emergency and pausing new utility rate increases. This initiative aims to prevent utilities from raising charges while the state accelerates new power generation.

The Illinois Clean Jobs Coalition has welcomed Pritzker’s proposal, emphasizing the need to protect consumers from “skyrocketing” bills. However, some business groups in Chicago have expressed concerns that the plan could “eliminate a proven economic development tool,” as stated by Jack Lavin, president of the Chicagoland Chamber of Commerce.

The proposed pause on tax credits for data centers is set to begin at the start of the state’s fiscal year on July 1. This program, initiated in 2019, has facilitated the construction of 37 projects to date. The pause will allow for a thorough evaluation of the program’s effectiveness and its impact on state revenue.

The state legislature is expected to vote on the budget proposal before June.

Copyright 2026 Bloomberg.

Illinois Governor JB Pritzker is taking decisive action to address the rising power bills affecting consumers by proposing a temporary halt on incentives for data centers.

Pritzker, a Democrat running for his third term, announced his plan during a recent budget address. He aims to implement a two-year moratorium on new state-issued tax credits for data centers, while also urging PJM Interconnection LLC, the largest grid operator in the U.S., to ensure that large energy consumers like data centers contribute fairly to the grid.

As the demand for electricity surges due to the increasing use of smartphones, electric vehicles, and artificial intelligence, ensuring a reliable electricity supply has become paramount. However, concerns are growing over who will bear the costs associated with powering data centers, especially as energy bills for American households continue to rise.

“We need to think critically about our future energy usage with the needs of Illinois households at the forefront,” Pritzker stated. “In the face of rising demand and surging prices, I’m proposing a two-year pause on the 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 highlighted the collaborative efforts he and other governors have made to push for changes from PJM, which serves 13 states, including New Jersey and Pennsylvania, as well as parts of northern Illinois. These efforts have included expediting interconnection times for renewable energy projects. He also called on PJM to require data center developers to cover the costs of capacity resources necessary to power their operations.

“We are actively working with all the governors in our footprint on multiple fronts to address the supply/demand imbalance that is driving up wholesale electricity costs,” stated Jeffrey Shields, a PJM spokesperson. “PJM is also collaborating with states and the utilities they regulate to require data centers and other large electricity consumers to either generate their own power or face curtailment during system emergencies.”

Shields added that PJM is taking steps to expedite connections for new projects. Additionally, PJM’s board has extended the price cap for another two years, a move aimed at stabilizing prices for consumers. He noted that Pritzker and the Illinois Commerce Commission are “fully engaged at all levels” in these discussions.

“Cost allocation to specific customer classes is in the hands of states, not PJM,” Shields clarified.

Illinois is not alone in its efforts to manage rising power costs. New Jersey’s new governor, Mikie Sherrill, recently issued executive orders declaring a state of emergency and pausing new utility rate increases. This initiative aims to prevent utilities from raising charges while the state accelerates new power generation.

The Illinois Clean Jobs Coalition has welcomed Pritzker’s proposal, emphasizing the need to protect consumers from “skyrocketing” bills. However, some business groups in Chicago have expressed concerns that the plan could “eliminate a proven economic development tool,” as stated by Jack Lavin, president of the Chicagoland Chamber of Commerce.

The proposed pause on tax credits for data centers is set to begin at the start of the state’s fiscal year on July 1. This program, initiated in 2019, has facilitated the construction of 37 projects to date. The pause will allow for a thorough evaluation of the program’s effectiveness and its impact on state revenue.

The state legislature is expected to vote on the budget proposal before June.

Copyright 2026 Bloomberg.