Facing Projected AI Demand Spike, 11 Governors In States Served By Largest Grid Operator Demanding More Authority

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On a quiet road in Valley Forge, Pennsylvania, not far from the field where George Washington’s starving soldiers waited out the winter in 1778, sits the headquarters for PJM Interconnection, the largest electrical grid operator in the United States. Inside, operators wage war against inclement weather and power surges, ensuring that electricity is reliably delivered to 65 million customers across 13 states and the District of Columbia. The control board looks like something out of a disaster movie — covering the walls and stretching nearly from floor to ceiling — but, by design, it’s a pretty drama-free environment. As the U.S. grapples with a surge in electricity demand, however, that may be changing.

In late September, governors from 11 of PJM’s member states banded together in Philadelphia to demand a greater role in the grid’s energy decisions, given rapidly rising costs faced by their constituents. Some even threatened to walk away from the 13-state grid altogether. “We need states to have more of a say in how PJM operates,” said Governor Josh Shapiro of Pennsylvania, who led the charge. “We need to move more quickly on energy-producing projects, and we’ve got to hold down costs. If PJM cannot do that, then Pennsylvania will look to go it alone.”

Pennsylvania is a net exporter of power and could, theoretically, pass a law forcing its generators to withdraw from the nonprofit and join a new grid operator, but that would require federal approval; plus, power generators would have to repay PJM for a mountain of payments the grid operator has already made. Shapiro’s bluster is more likely intended to force changes within PJM and secure a greater role for public officials in the grid they rely on. What the governors really want, in the end, is lower retail electricity prices. In fact, preventing the kinds of dramatic rate increases that customers are seeing now, as tech companies rush to build energy-hungry data centers, was the reason PJM was formed. Until about 30 years ago, U.S. electric utility companies controlled both the means of generating energy via power plants and the transmission and distribution systems that delivered that energy to customers. Rising prices in the ’80s and ’90s led many states to rule that utility companies could no longer own power plants, breaking the generators’ monopoly control within a given region. These moves came after the federal government took steps to open the nation’s grids to independent power generators that could compete with utility-owned plants.

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A report from the Union of Concerned Scientists found that ratepayers in seven data-center-friendly states within PJM’s territory were charged $4.4 billion for the transmission upgrades data centers require in order to come online. In Washington, D.C., for example, customers saw an average increase of $21 on their monthly electricity bills. Skyrocketing prices at PJM’s capacity auctions are a key factor putting pressure on consumer prices. In July, PJM announced that the cost of its most recent capacity auction had risen to $16.1 billion, up from only $2.2 billion just two years ago. This was, according to Monitoring Analytics, a PJM watchdog group, “almost entirely due to existing and projected large data center load additions to the PJM grid.” The group also pointed to “the extreme uncertainty in the load forecasts” as a “unique and unprecedented situation” that needs to be addressed. Monitoring Analytics and the Natural Resources Defense Council, or NRDC, have both suggested that PJM adopt a “bring your own generation” system, in which particularly electricity-gobbling customers like data centers would be obligated to build their own sources of power upfront, rather than draining the grid.

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https://grist.org/climate-energy/data-centers-electric-grids-pjm-operator-state-officials/