Maryland Governor Wes Moore on Monday urged sweeping changes to PJM Interconnection - the regional grid operator serving 13 states across the Midwest and Mid-Atlantic - saying reforms are needed to address rising costs for consumers and to rebalance supply and demand on the grid.
At the annual meeting of PJM members, Moore argued for new rules that would include long-term, fixed-price supply contracts and a requirement that the expanding cluster of data centers in the region pay for the costly upgrades and infrastructure needed to serve them. PJM's territory contains what industry participants describe as the world’s largest concentration of data centers.
The push comes after roughly two years in which demand from major technology companies for large server warehouses has outstripped additions of new generation on the grid. That dynamic, officials and stakeholders say, has contributed to a supply squeeze that has pushed household power bills sharply higher and increased scrutiny of market functioning.
PJM’s capacity payments - payments that act as an insurance mechanism to ensure adequate supply during periods of high demand - have surged about 1,000% over the last two years. The spike prompted a group of governors, including Moore, to press for a temporary cap on those prices last year, a measure that was implemented.
A central element of PJM’s own proposed reforms is to introduce long-term, fixed-price contracting between suppliers and large electricity consumers such as data centers. The reforms are intended to provide greater certainty for investment in new generation and to better align growing demand with the resources needed to meet it.
Despite agreement on the broad contours of change, panelists at the meeting voiced differing views about the underlying causes of market volatility. PJM representatives said that a patchwork of state policies - including clean energy targets that have favored wind and solar over gas and coal plants - and government interventions in markets have discouraged investors from making the long-term commitments required to build new power plants in the region.
Governors, including Moore, countered that PJM has been slow to approve new generation even as it has moved forward with transmission projects that they contend have been costly and failed to deliver benefits commensurate with their expense to certain states.
"This is a generational challenge that no one organization, state or industry can solve alone. It will take coordination across policymakers, grid operators, utilities, generators, and large energy users to help evolve the grid at the speed and scale this moment demands," said PJM spokesman Jeff Shields.
PJM said it recognizes the pressure created by rising power bills and that it is working to speed the addition of more electricity supplies to the grid. The operator's comments at the panel emphasized the need for coordinated action across multiple actors to address the structural issues affecting the market.
In Maryland, political leaders have moved to take additional steps to relieve consumers. Moore is slated to sign the state’s Utility RELIEF Act on Tuesday. The legislation is designed to provide financial relief to utility customers through dedicated funds and other measures, and includes a cap on utility executive salaries as one of its provisions.
The proposals discussed at the PJM meeting - from long-term contracting to cost-allocation for data center infrastructure - reflect an effort by state officials and market participants to find mechanisms that can stabilize prices, encourage necessary investment, and address the growing strain created by rapid demand from large technology users.