Bipartisan Group of State Legislators Urge PJM to Adopt Ratepayer Protections

WASHINGTON, D.C. – Today, a bipartisan coalition of state legislators from across the mid-Atlantic and parts of the Midwest announced their submission of the Protecting Ratepayers Proposal to PJM, the region’s grid operator, to ensure that the 67 million Americans living in PJM will not bear an unfair share of reliability and cost risks driven by massive data center electricity demand.

On November 19, the PJM board of directors will decide how to manage the connection of new, power-hungry data centers to the regional grid. The anticipated demand from new data centers is projected to reach 32 gigawatts (GW), with forecasts suggesting it could surge as high as 60 GW in the coming years. If the costs of meeting this demand are socialized across the ratepayer base, electricity bills could rise by $163 billion across the region, averaging approximately $70/month for the average household.

The state lawmaker coalition says their Protecting Ratepayers Proposal builds on a resolution passed by the National Conference of State Legislators adopted in August, which recognizes opportunities for data centers to contribute to grid resiliency while mitigating impact on ratepayers and communities by ensuring large-scale energy users pay their fair share of costs.

The proposal builds upon elements of existing stakeholder proposals submitted to PJM, including one submitted by the governors of Maryland, Virginia, New Jersey, and Pennsylvania in partnership with the Data Center Coalition (DCC) and Exelon. The state lawmaker coalition endorsed the governors’ proposal, calling it a collaborative approach that incentivizes data centers to connect to the grid responsibly. Crucially, the coalition added a requirement for data centers to pay for their own electricity demand, a safeguard designed to protect constituents from higher bills or potential blackouts if incentives alone fall short. 

The proposal has significant overlap with proposals from consumer advocate groups in Pennsylvania and Maryland and is now supported by NRDC (Natural Resources Defense Council), whose original suggestions were incorporated into the Protecting Ratepayers Proposal. The proposal combines opportunities for data center growth with essential backstop mechanisms that mitigate the price and reliability impacts of load growth on the public. 

Key features of the proposal

1. Incentives for data centers to “Bring their own” new power supply, adopted from the governors, DCC, and Exelon proposal
2. Every possible path for new data centers to “bring their own” firm power supply quickly, including through new power plants, new demand response, and fast-to-construct distributed energy resources, while preventing “poaching” existing power plants from the grid or harming resources already waiting to connect
3. Load forecasting enhancements to weed out speculative data centers for transmission planning, adopted from the Maryland Office of People’s Council proposal
4. An essential safety backstop which prevents the public from paying for the capacity costs of new data centers in the event that options (1), (2), and (3) are not sufficient on their own. Data centers can join PJM but will not be given firm service until they “bring their own” capacity.
5. A temporary extension of the capacity market “price collar” to prevent continued price spikes, adopted from the governors, DCC, and Exelon proposal

Legislators emphasized that while each state faces unique energy challenges, they are united by a shared goal: ensuring families and small businesses across the PJM region aren’t left to subsidize the energy costs of large new data centers being built by Fortune 500 companies like Google, Amazon, and Microsoft.

To advance that shared goal, these lawmakers and advocacy groups are rallying together in a growing, bipartisan call for PJM to put consumers first and ensure that corporate growth does not come at the expense of affordability or reliability. The principle of the proposal is echoed in a letter to the PJM board of directors from members of Congress from Maryland, Virginia, New Jersey, Illinois, Pennsylvania, Delaware, and Washington D.C.

Quotes from supporters of the Protect Ratepayers Proposal:

"Our offices are on the frontlines, hearing every day from constituents who are already struggling to make ends meet," said Maryland state senator Katie Fry Hester. "We're talking about single mothers working two jobs, senior citizens on fixed incomes, and families who must choose between paying their electric bill and putting food on the table. Energy poverty is a real and growing crisis;we have a responsibility to ensure that technological growth doesn't push vulnerable residents into financial hardship or enable a massive transfer of wealth from ratepayers to data centers.”

“My constituents have felt the impacts of the Maryland Piedmont Reliability Project firsthand, a project driven in part by the need to serve growing data center demand,” said Maryland state senator Chris West. “New transmission lines can devastate homes, farms, families, and entire communities, and those local costs are too often overlooked. I’m proud that this proposal includes a commonsense solution to help prevent similar situations in the future. By enabling new generation to connect more quickly where it’s most needed, without pushing additional transmission costs onto local communities, we can meet energy demand responsibly while protecting ratepayers from unnecessary financial burdens.”

“Data centers aren’t the only cause of spiking electric rates for DC residents, but they are overwhelming our grid. Having them pay their fair share will be a step in the right direction,” said District of Columbia councilmember Charles Allen. “At its core, this is a supply and demand issue where data centers are driving up demand while PJM hasn’t acted with the same urgency other regional grid operators have to add more supply from renewables and batteries. As a result, our region and our residents are being hit with some of the biggest rate increases in the country. As a start, I urge the PJM Board to take a step in the right direction to begin by requiring these large data centers, owned by very large and valuable corporations, to pay the true cost of their impact on the grid and in doing so, provide some relief to residents and local businesses.”

“PJM has a duty to protect the reliability and affordability of our electric grid—not the profit margins of wealthy mega-corporations,” declared Pennsylvania representative Chris Rabb. “Allowing unchecked data center growth to drive up costs and risk blackouts for millions of residents and small businesses is unacceptable; PJM must ensure that the public interest, not private greed, powers our energy future.”

“Energy policy does not stop at the state line: because Delaware is part of a regional grid, projects all across the East Coast and even into the Midwest have direct impacts on our energy supply and demand here in the First State,” said Delaware state senator Stephanie Hansen. “I’m proud to join a bipartisan chorus of voices advocating that PJM take a responsible and consumer-focused approach regarding data centers.”

"The explosion in energy demand due to data centers is already causing electricity costs to spike, and if forecasts for anticipated demand come to fruition those costs will only continue to rise," said New Jersey state senator Bob Smith. "While data centers are a key driver of economic growth and innovation, their expansion cannot come at the cost of everyday ratepayers. Working families and small businesses are already struggling to face daily expenses as they are, and the last thing they need is another increase to their monthly electricity bills. PJM has a duty to make these data centers pay for their impacts on the grid, and this proposal would be an important step in putting everyday consumers first."

"This proposal balances our need to protect ratepayers from higher electric bills while still investing in the future and encouraging the tech industry to grow in New Jersey," said New Jersey assemblyman David Bailey.

“More than 480,000 Hoosiers in Indiana Michigan Power's service area rely on consistent and affordable electricity for their homes, schools, and businesses,” said Indiana representative Sue Errington. “Data centers are placing significant new demands on the grid, driving up costs – yet rates continue to rise without any meaningful improvements in service for the families who are taking on these costs. Ratepayers in Indiana and all across PJM's footprint deserve energy systems that are reliable, resilient, and affordable. As we evaluate policies and rate structures moving forward, our focus must remain on residential customers who bear the greatest burden yet have for too long been the last ones to see the benefits.”

"Data centers should power their profits, not drain the wallets of everyday Americans,” said Illinois senator Rachel Ventura. “This proposal is about fairness and responsibility. We’re making sure data centers carry the cost of their own energy demands instead of passing it on to the public."

“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. "As this bipartisan group of legislators makes clear, PJM must support a common-sense solution that recognizes economic opportunity without sacrificing consumer protections."

The Bipartisan PJM State Legislators Collaborative is an informal, bipartisan group of state legislators from across the PJM Interconnection region. The members are united by the common goal of ensuring affordable, reliable energy for their 67 million constituents and advocating for state interests in regional and federal energy policy decisions.