‘Consequential’ day ahead for future household electricity costs

By Lauren Jessop | The Center Square contributor
The Center Square

(The Center Square) – PJM’s Board of Directors is preparing to make one of the most consequential decisions of this decade, says a coalition of state legislators from the grid operator’s region.

And, depending upon the choice made, it could save households and businesses as much as $70 per month on their utility bills.

On Monday, ahead of a pending Nov. 19 vote on proposals that would determine how data centers should be connected to the grid, the coalition announced it submitted a plan to ensure the 67 million Americans served by PJM will not bear an unfair share of reliability risk and cost driven by soaring data center electricity demand.

The Protecting Ratepayers Proposal came in response to PJM’s Critical Issues Fast Path, or CIFP – an initiative launched in August to fast-track discussions and policy decisions on managing rapid growth of large load customers like data centers.

The proposal builds on a resolution passed by the National Conference of State Legislators and upon elements of others submitted to PJM, including one submitted by the governors of Maryland, Virginia, New Jersey, and Pennsylvania, in partnership with the Data Center Coalition and Exelon.

It also echoes proposals from consumer advocate groups in Pennsylvania and Maryland and has gained the support of the Natural Resources Defense Council, or NRDC, whose original suggestions were included.

During a media briefing on Monday, Democratic DC Councilmember Charles Allen emphasized that the issue impacts everyone, and the coalition’s size and scope highlight what’s at stake. “It’s not very often that leaders from a broad number of states come together in a shared fight,” he added.

Sen. Katie Fry Hester, D-Md., explained that anticipated demand from new data centers is projected to reach 32 GW, with some forecasts suggesting it could grow to 60 GW in the coming years.

“That’s the equivalent of adding a major city like Philadelphia to the grid almost overnight,” she said.

On Wednesday, after reviewing between 16 and 20 proposals, PJM and its members – including utility companies, transmission operators and power generators – then vote on their recommendations to the Board of Directors.

“Data centers should power their profits, not drain the wallets of everyday Americans,” said Sen. Rachel Ventura, a Democrat from Illinois.

Her state, she said, has already started to address the challenge by passing Senate Bill 25, also known as The Clean and Reliable Grid Affordability Act, now awaiting Gov. JB Pritzker’s signature.

The bill invests in battery storage, energy efficiency, and smart grid technologies, Ventura said. It adds 3 GW of storage with no upfront cost to consumers, which can be dispatched at peak time to lower prices and improve reliability. She noted that it’s a strong first step, but Illinois alone cannot solve a regional problem.

“The cost of electricity is expected to skyrocket by over $100 billion through 2033 due to data center load growth, which could cost families and businesses in PJM territory an extra $70 per month,” said Claire Lang-Ree, advocate for the Sustainable FERC Project at NRDC.

Lang-Ree said the coalition’s proposal is one of the few that addresses the difficult question of what happens if there isn’t enough power to go around.

She explained that under their proposal, data centers can join PJM quickly, but they will be interruptible – or the first to be curtailed – unless they bring their own capacity to the grid.

Other key features of the proposal include:

Multiple fast-track options for data centers to bring their own firm power supply through new power plants, demand response, or distributed resources – while preventing them from pulling existing plants from the grid or jumping ahead of renewable projects already in the queue. Load forecasting enhancements to screen out speculative projects for transmission planning.A temporary extension of the capacity market “price collar” to curb further price spikes.

Legislators stressed that while each state faces unique energy challenges, they are united in the shared goal of ensuring ratepayers across the PJM region are not subsidizing the energy costs of new data centers being built by Fortune 500 companies like Google, Amazon, and Microsoft.

Delaware and Maryland have enacted transparency laws requiring public utilities to report how they vote in the PJM Interconnection stakeholder/committee process, according to Sen. Stephanie Hansen, a Democrat from Delaware.

Energy resources are scarce, so competition is fierce, Hansen said.

“It’s the wild wild west when it comes to where data centers will be located. There are few rules, and states are competing against each other for jobs and revenue, “knowing that the cost to feed the energy monster,” as Hansen described it, “will be socialized to other ratepayers in and out of the state.”

She said they encourage PJM to forge a responsible path going forward – and keeping renewable projects at the forefront of interconnection planning is critically important. “This is a marathon, not a sprint,” she said, “and the starting gun has already sounded.”