‘Consequential decision’: PJM electrical grid to decide who pays bill for massive data centers

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State lawmakers from Mid-Atlantic states and parts of the Midwest are urging PJM Interconnection to make sure the financial burden of power-hungry data centers wanting to connect to the regional grid operator doesn’t fall on families.

Grid-operator stakeholders are expected to make a recommendation Wednesday to present to the board of directors. The ultimate decision will be key to how it will manage the rapidly rising electricity demands from data centers plugging into the grid.

“PJM is about to make one of the most consequential decisions of this decade,” said Maryland state Sen. Katie Fry Hester. “How will we integrate an unprecedented wave of new data centers into our regional grid?”

The grid serves more than 67 million ratepayers in Pennsylvania, Delaware, New Jersey, Maryland and part or all of 10 other states, as well as Washington, D.C.

Coalition warns energy bills could rise by $70 for the average family

The Natural Resources Defense Council, an environmental advocacy group, said estimated cumulative capacity costs could reach $163 billion from 2027 through 2033.

State lawmakers say if protections are not put in place now, ratepayers will continue to be forced to pay higher electricity costs from the data centers. In the long term, PJM anticipates demand for electricity could grow 32 gigawatts from 2024 to 2030, with all but 2 gigawatts coming from data centers. Some forecasts have future demand surging as high as 60 gigawatts.

Fry Hester said if PJM doesn’t take action, most of that money from increased energy demand could be paid by the public, potentially amounting to an extra $70 a month for the average family. Besides high prices, customers could experience declining reliability and an increased risk of rolling blackouts.

She is one of several lawmakers who are part of the Bipartisan PJM State Legislators Collaborative. The group is one of several that submitted proposals this month to deal with the large energy demands of data centers.

The coalition argues its plan would protect ratepayers by requiring data centers to pay for their own energy supply. Under the proposal, PJM would no longer source supply for high energy demand, and PJM would just manage it. Data centers without their own source of power could face interruptions to service when demand outpaces supply.

The coalition says it wants to ensure “families and small businesses across the PJM region aren’t left to subsidize the energy costs of large new datacenters being built by Fortune 500 companies like Google, Amazon, and Microsoft.”

This week’s vote could be one of the first times that member states see how all the stakeholders voted. Delaware, New Jersey and Maryland have all passed legislation requiring PJM stakeholders to make the process public, shining a light on what used to be a secretive ballot process.

Pepco Holdings, the parent company for Delmarva Power and Atlantic City Electric, are PJM voting members.

PJM has long been criticized for high prices, being slow to load supply

Delaware state Sen. Stephanie Hansen said it has taken far too long for PJM to connect clean energy to the grid. She also criticized proposals that would allow data centers to jump ahead of projects already in the queue.

“We’re seeing proposals to allow data centers to pick and choose fossil resources that can cut in line ahead of clean energy projects that would bring economic benefits and help us meet our state renewable energy goals,” she said.

Governors from 11 of PJM’s 13 member states, including Delaware, Pennsylvania and New Jersey, met in Philadelphia earlier this year to demand more transparency and say in PJM’s decisions. Pennsylvania Gov. Josh Shapiro has threatened to leave the regional grid without it making major changes, adding that PJM has “months, not years” to make reforms that will keep costs down for consumers.

“With the PJM Governors’ Collaborative, we’re insisting on accountability and a stronger voice for states in how our grid is managed,” Delaware Gov. Matt Meyer said in a statement. “Together, we can bring new generation online faster and ensure every Delaware family has a utility bill they can manage.”