A data center owned by Amazon Web Services, front right, is under construction next to the Susquahanna nuclear power plan in Berwick, PA on Jan. 14, 2025. | AP Photo/Ted Shaffrey
By Jeff St. John and Canary Media | Capitol News Illinois
PJM Interconnection, the biggest grid operator in the U.S., has finally settled on a plan to prevent data centers from causing other customers’ utility bills to soar further in its 13-state territory.
That plan relies heavily on states themselves, and the utilities they regulate, to force data centers to secure their own power supplies — or face the possibility of getting their power cut off during grid emergencies.
Last week, PJM’s board of managers sent proposals along these lines to the Federal Energy Regulatory Commission (FERC), which must grant the grid operator permission before it can implement the new plan for its system, which serves about 67 million people from Virginia to Illinois. The multipart plan is PJM’s attempt to quiet down months of mounting pressure from state governors and the Trump administration to contain skyrocketing costs while staying within its regulatory limits.
“Historically, PJM has been very nervous to step into what it considered — or what are legally — the states’ rights,” said Julia Hoos, who leads coverage of Eastern U.S. power markets for Aurora Energy Research. But with its new proposals, PJM is “making a definitive request to the states to accomplish what it needs.”
PJM forecasts that data centers and other “large loads” will add 30 gigawatts to 34 gigawatts of new demand by the early 2030s and as much as 70 GW by 2038. Building enough new energy resources to meet that demand would push enormous costs onto utility customers.
State lawmakers and environmental and consumer advocates have been demanding that PJM instead require that new data centers get cut off from the grid when electricity demand is especially high, unless those facilities can pay for and build the resources required to keep them online.
But states, not PJM, are in charge of deciding which customers can connect to the grids operated by state-regulated utilities. That constraint played a role in PJM backing off last year’s proposal to create a “non-capacity-backed load” program to force new large loads to submit to being cut off during grid emergencies. Data center industry groups and other stakeholders warned that the plan could face legal challenges.
PJM’s new proposal, dubbed the Interim Resource Adequacy Service, or IRAS, largely re-creates that structure, only with states and utilities as the primary responsible parties, said Tom Rutigliano, senior advocate for climate and energy at the Natural Resources Defense Council. In that sense, “it’s almost like they got to not too far off from where they started,” he said.
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