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Summary
- State leaders plan PJM Governors’ Collaborative for greater influence over PJM grid
- Capacity payments rise 1,000% due to data center demand and stagnant power supply
- Governors seek formal role in PJM, inspired by Midwest and New England models
(Reuters) – Governors of more than a quarter of U.S. states are pushing for greater influence over the country’s biggest power grid — PJM Interconnection — where electricity prices are surging as demand driven by AI data centers outpaces the connection of new supplies.
Rising power bills in PJM, which operates the grid covering 13 states and the District of Columbia, or one in five Americans, have led to a political backlash over the last year and threats by some governors to abandon the regional grid.
The group of state leaders plans to announce the “PJM Governors’ Collaborative” on Monday during a summit in Philadelphia to advocate for their interests in PJM, a member-run organization in which states do not have a vote, according to a person familiar with the plans.
“Among the first ideas the PJM Governors’ Collaborative will discuss at the summit will be historic reforms to PJM governance to give the states a larger role in decision-making moving forward,” the source said.
Ballooning prices in PJM have been caused by a confluence of factors, including the cost to produce and transport electricity and a surge in demand brought by Big Tech data centers. PJM’s territory holds the largest concentration of energy-intensive data centers in the world.
Capacity payments, which are made to power plant operators to guarantee they run during periods of spiking demand to avoid blackouts, are a piece of power bills in the region.
Those payments, determined by annual energy auctions, have risen by about 1,000% over the last two auctions on the projected rise of data center demand coupled with largely stagnating power supply.
PJM is governed by a board of managers, and its voting members include transmission line owners and independent power plant operators.
While states are not given a vote, they have wielded their power over PJM in other ways. Pennsylvania Governor Josh Shapiro led a successful push to put a price ceiling and floor on PJM’s most recent capacity auction.
Governors are seeking a more formal role in shaping PJM that might be modeled after similar groups in Midwest and New England grids, a source familiar said.
Shapiro, who runs the biggest electricity-producing state in the PJM region, plans to discuss issues including the PJM stakeholder process, market reforms, connecting new power supplies faster and increasing transparency in PJM, according to a release by the governor’s office.
Reporting by Laila Kearney; Editing by Chizu Nomiyama
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