PJM, the regional electric grid operator for 13 states including Maryland, will hold a stakeholders vote Wednesday to select which of nearly 20 data center regulation proposals they will recommend to its board of directors.
Anticipated demand from new energy-hungry data centers in the region could surge as high as 60 gigawatts in the coming years, which is the equivalent of adding a major city like Philadelphia onto the grid overnight.
Without regulation, electricity bills could rise by over $160 billion across the region by 2033, averaging around $70 per month for the average household.
Ahead of the vote, a bipartisan coalition of state legislators from across the Mid-Atlantic and parts of the Midwest submitted their own proposal to PJM for consideration dubbed the “Protecting Ratepayers Proposal.”
Maryland State Sen. Katie Fry Hester (D-Caroll & Howard Counties) explains the proposal builds upon various proposals submitted — including one spearheaded by the governors of Maryland, Virginia, New Jersey and Pennsylvania in partnership with the Data Center Coalition and Exelon — but adds extra ratepayer protections.
“It is the only plan that both encourages data center investment and guarantees a fallback mechanism if these voluntary actions fall short,” Hester said. “We welcome the economic opportunity that these data centers bring, but this growth has to be matched with responsibility.”
The “Protecting Ratepayers Proposal” allows data centers to quickly connect to the PJM grid and incentivizes them to bring their own power supply. If the data centers don’t bring their own capacity, their service would be interruptible.
“What that means is that PJM will no longer buy capacity, which is buying the promise of new power plants, to serve future demand for data centers that have not yet brought their own capacity,” said Natural Resources Defense Council’s Claire Lang-Ree. “This alone will save the region over $100 billion by 2033 – most of which would have been paid by the public to existing power plant owners.”
Additionally, when there is not enough capacity to go around in a zone, like during extreme winter storms or hot weather events, zones with data centers who have not yet brought their own capacity will be curtailed first.
“So in practice, this may only occur less than one-tenth of one percent of the time, but this action will shield the public from blackout risk and save hundreds of billions of dollars,” Lang-Ree explained, calling the stakeholder vote one of PJM’s most “consequential decisions of this decade.”
The proposal also endorses the extension of the one-year price cap on capacity market prices and the protection of power plants in the PJM queue by not allowing a special fast-track for data centers.
While the Data Center Coalition has raised some concerns about the “Protect Ratepayers Proposal,” including the curtailment process, halting of queue jumping and “bring your own power” specifications, DC Councilmember Charles Allen says those objections are expected.
“Am I surprised that the Data Center Coalition would be concerned about an effort to not let them skip the line? No, I'm not surprised by that. I'm more concerned about the cost that they are trying to put onto our residents and onto our local businesses,” Allen said.
PJM serves 67 million people and has one of the longest wait times in the country to connect new sources of power onto the grid.
On Wednesday, PJM stakeholders — like Baltimore Gas and Electric (BGE) — will vote on which proposal to recommend to the PJM Board of Directors.
The board has the ultimate say in which proposal, or perhaps a combination of multiple, gets submitted to the Federal Energy Regulation Commission (FERC) for final approval.
PJM meetings are not recorded and votes are not public, however states like Maryland and Delaware recently implemented laws requiring PJM stakeholders to report to the state how they voted.
“If you are a stakeholder to our utilities – if you are a stakeholder in the PJM process – you need to report to us what your vote is so that we know how you as a utility are voting on behalf of your ratepayers. Because that's important information for us to know,” Delaware State Sen. Stephanie Hansen said.
Lawmakers said they were not aware of a timeline for the board’s final decision.
