Governors Across PJM Region Demand Data Centers Pay Fair Share for Rising Energy Costs

Annapolis, MD – A coalition of governors from the PJM region, which oversees electricity for 65 million people across 13 states and the District of Columbia, has formally called for significant changes to how the costs of increasing electricity demand are allocated. According to a press release from the Office of Governor Wes Moore, the governors are urging PJM Interconnection to ensure that the companies driving this demand, particularly those operating large data centers, are responsible for the associated costs, rather than passing them on to residential and small business customers who are already experiencing high utility bills.

The surge in electricity demand, significantly fueled by the rapid expansion of data centers, has led to a sharp rise in energy costs across the PJM region. A primary driver of these increases is the capacity market, a system designed to compensate power plants for remaining available during periods of peak demand. Recent years have seen a dramatic escalation in these capacity costs, with prices jumping from approximately $29 per megawatt-day to over $333 per megawatt-day. These escalating charges are directly reflected in the monthly electricity bills paid by households and businesses. Governor Moore emphasized that Maryland residents should not be burdened with subsidizing the substantial energy requirements of new, large-scale data centers.

The governors’ collective message to PJM Interconnection outlines several key principles intended to guide the development of a reliability backstop auction. This process is crucial for ensuring sufficient power generation to maintain grid safety as demand continues to grow. A central tenet of their proposal is that new, significant energy consumers, such as data centers, should bear the responsibility for the capacity resources necessary to meet their demands. This would prevent the cost from being spread across all utility customers. Additionally, the governors advocate for robust protections to safeguard existing customers from incurring costs associated with infrastructure that may become unnecessary if a data center project is altered or canceled.

Furthermore, the governors are seeking continued consumer protections to prevent inflated prices. They acknowledged PJM’s recent extension of a capacity market price collar, which is estimated to have already saved ratepayers approximately $13 billion in avoided costs, and expressed a desire for these protections to be maintained. The proposed “connect-and-manage” approach suggests that data centers could connect to the grid under the condition that they agree to reduce their electricity consumption during times of potential grid unreliability. This would avert the need for extensive and costly grid overbuilding at the expense of all consumers. The principles also call for flexible eligibility for new resources, advocating for rules that allow for the integration of new clean generation and storage solutions by the 2027–2028 delivery year, without excluding innovative technologies. Finally, the governors stressed the importance of state collaboration, urging PJM to work directly with the involved states and the District of Columbia as they develop their own regulations to prevent the shifting of data center costs onto consumers.

Governor Moore has consistently prioritized energy affordability and has been a vocal proponent of reforms within the PJM Governors’ Collaborative, advocating for ratepayer relief and greater transparency and responsiveness in grid governance. During the 2026 Maryland legislative session, Governor Moore, in conjunction with Senate President Bill Ferguson and House Speaker Joseline Peña-Melnyk, introduced the Utility RELIEF Act. This comprehensive legislation aims to reduce utility bills, enhance consumer protections, and mandate that large-load customers cover the costs of their own grid infrastructure upgrades. The administration has consistently argued that developers of data centers, often backed by highly profitable global corporations, should not be permitted to transfer their expenses onto Maryland families. Governor Moore has actively engaged at the state, regional, and federal levels to promote reforms in the capacity market, implement price protections, and revise cost allocation strategies to mitigate the impact of escalating electricity costs on Maryland residents and businesses.

Article by Mel Anara, based upon information from The Office of Governor Wes Moore

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