Governors from 11 states served by PJM Interconnection have demanded more influence over the grid operator's decisions amid rising electricity costs driven by data centers. Led by Pennsylvania's Josh Shapiro, they met in Philadelphia in late September and threatened potential withdrawal if changes are not made. The push highlights tensions between tech expansion and consumer affordability.
PJM Interconnection, headquartered in Valley Forge, Pennsylvania, manages electricity for 65 million customers across 13 states and the District of Columbia. It operates a daily energy market that buys power from the lowest bidders and a capacity market that secures commitments from generators for future demand, accounting for about 25 percent of utility bills.
In late September, governors from 11 PJM member states gathered in Philadelphia to address surging costs. Pennsylvania Governor Josh Shapiro, who led the effort, stated, “We need states to have more of a say in how PJM operates. 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.” As a net power exporter, Pennsylvania could theoretically withdraw but would need federal approval and generator repayments to PJM.
The governors seek lower retail prices as data centers, fueled by AI growth, strain the grid. In March, President Trump and Senator Dave McCormick announced $90 billion in private investments to make Pennsylvania an AI and data center hub. Virginia's Data Center Alley handles 70 percent of global internet traffic, while Ohio emerges as a tech player. A Union of Concerned Scientists report noted $4.4 billion in transmission upgrade costs for ratepayers in seven PJM states, adding $21 monthly to D.C. bills on average.
PJM's July capacity auction cost $16.1 billion, up from $2.2 billion two years prior, largely due to data center loads, per Monitoring Analytics. The group described this as an “unprecedented situation” and, with the Natural Resources Defense Council, proposed a “bring your own generation” requirement for large users. Experts estimate 75 to 90 percent of data center requests may not materialize, yet they inflate forecasts.
PJM faces criticism for a backlog in its interconnection queue, mostly renewables, paused for new requests since 2022 until 2026. Robert Routh of NRDC said, “The sheer volume of requests started to overwhelm them.” Recently, 105 lawmakers urged clearing the queue to access expiring tax credits.
In response, PJM proposed the Critical Issue Fast Path to fast-track state projects, eliminate duplicates, and require state approval on projections. Nick Abraham of the League of Conservation Voters warned that tech firms' clean energy pledges conflict with potential fossil fuel reliance: “They cannot do that if they are adding more fossil fuels to the grid because of these data centers.” A PJM representative affirmed efforts within its authority to handle demand growth.