PA Environment Digest Blog: On The Eve Of New PJM Capacity Auction: Gov. Shapiro, 5 Other Governors Say PJM's Efforts To Deal With A.I. Data Center Demands Have Failed; Urge 'Decisive Action' To Avoid 'Extraordinarily’ High Prices

In a December 3 letter to the Chair of the PJM Interconnection Board, six state governors-- including Gov. Shapiro-- said PJM's most recent efforts to deal with A.I. data center electricity demands have failed and urged the grid operator to take 'decisive action' to avoid 'extraordinarily high prices' and to add new electric generation.

The governors of Delaware, Illinois, Maryland, New Jersey, Pennsylvania and Virginia signed the letter.

The governors recommended an immediate extension of the current price collar for one further auction in June 2026 for capacity delivery in 2028/29.

PJM's next electric generation capacity auction opens December 4 and closes December 10 for delivery in 2027/28. PJM will report the results of the auction on December 17.

This auction is covered by the price collar-- a price cap of $329/MW-day and a floor of $175/MW-day-- imposed by PJM's settlement with Gov. Shapiro earlier this year. Read more here.

The last PJM auction in July resulted in electricity prices coming in at the cap price of $329/MW-day across the entire service area. Without the cap, PJM said the prices would have been $390.57/MW-day. Read more here.

PJM Proposals Rejected

The letter notes 12 proposals for dealing with connecting large loads like A.I. data centers to the grid were overwhelmingly rejected by PJM stakeholders making it "clear that this effort has fallen well short of consensus, and more importantly, has failed to provide both the reliability and affordability that our communities rely on from PJM."

"Given the Members' votes, we are greatly concerned that we will shortly end up with the least desirable outcome: forthcoming auctions that yield extraordinarily high prices, but neither guarantee reliability nor lead to a corresponding increase in generation, and provide no clear regional rules for LLC [large load] integration."

"Given this serious concern, we write to urge the Board to take decisive action in its upcoming filing with FERC [Federal Energy Regulatory Commission] to guarantee that LLAs join the grid in a manner that does not produce significant price increases for existing customers or negatively affect the reliability of our region."

"Without measures that protect consumers, the cost in next summer's auction could double from this July's record amount while still failing to ensure system reliability-- that outcome would be unacceptable."

Extending Price Collar

"We look to you to ensure that our consumers do not face such extraordinary price increases by taking a moderate step: extending the current price collar for one further auction."

"Given the lack of consensus on November 19, we both need you to act decisively to ensure new entry of much-needed supply and protect reliability, while also taking this concrete step to protect our constituents from further dramatic price spikes while deeper reforms are still underway."

"We intend to remain actively engaged on these issues, and will continue to work collaboratively with a range of stakeholders to advance the clear consumer interest in reliable power at the least cost."

Click Here for a copy of the letter.

Resource Links - Energy Affordability/Reliability:

-- PJM Market Monitor Files Complaint With FERC Saying PJM Is Proposing To Allow A.I. Data Centers To Connect To Grid That It Cannot Reliably Serve, Will Require Blackouts To Maintain Service [PaEN]

-- PUC: Most PA Electric Utility Consumers To See 3.7% To 10.6% Increase In Electricity Prices During The Next 3 Months Starting Dec. 1 [PaEN]

-- PUC Chairman Highlights 'Extraordinary Challenges' Pennsylvania Families Are Facing This Winter With Energy Bills And His Appreciation For Groups Providing Assistance [PaEN]

-- Data Center Stampede Trampling PA Ratepayers Part III: PJM Market Monitor - Data Centers Have Cost Existing Ratepayers $16.6 Billion Already; Centers Should Bring Their Own Power Generation To Prevent More Large Price Spikes [PaEN]

-- Data Center Stampede Trampling PA Ratepayers Part I: PA Utility Law Project - Utility Terminations Up 30% Already; Prioritize Existing Loads; Centers Need To Help Pay For Utility Assistance [PaEN]

-- Data Center Stampede Trampling PA Ratepayers Part II: PA Consumer Advocate - PUC Should Set Conditions For Centers To Be Served By The Grid; Set Power Curtailment Priorities [PaEN]

-- NRDC: PJM Grid Members Fail To Recommend Any Of 12 Proposals To Prevent Existing Electric Ratepayers From Bearing The Costs, Reliability Risk Of Soaring A.I. Data Center Energy Demand [PaEN]

-- PJM Electric Auction Impacts: 1 In 5 PA Households Report Problems Now Paying Energy Bills; Electric Utility Shutoffs Up 38.1% So Far This Year [PaEN]

-- PJM Electricity Auction: PJM Lost 2.8 Gigawatts Of Power Due To Reduced Reliability Rating Of Natural Gas Power Plants; Could Gain 12.2 Gigawatts By Increasing Reliability From Less Than 75% Now To An Achievable 90% [PaEN]