Montco PJM Grid Operator Faces Heat From Governor Over Data Centers
Headquartered in Montgomery County, Pennsylvania, PJM Interconnection manages the high-voltage electric grid for 65 million people across 13 states and Washington, D.C. This regional transmission organization has become the epicenter of a fierce political battle involving Pennsylvania Governor Josh Shapiro, surging artificial intelligence demands, and skyrocketing electricity bills.
Governor Shapiro has aggressively criticized PJM regarding its management of the electrical grid’s “capacity market”—a system designed to pay power generators to ensure enough electricity exists for future peak demand. The core of the dispute lies in the rapid expansion of data centers, particularly those driving AI technology, which PJM projects will account for nearly all new load growth in the coming years. Recent capacity auctions resulted in record-breaking price increases, which Shapiro argues will unfairly burden consumers with billions of dollars in higher utility bills without guaranteeing immediate reliability improvements.
The Governor characterizes PJM’s forecasting methods as opaque and accuses the operator of moving too slowly to connect new energy projects to the grid. In a recent legal maneuver, Shapiro’s administration secured a settlement forcing PJM to implement a “price collar,” essentially a cap to prevent runaway costs. He claims this intervention could save ratepayers an estimated $27 billion over the next several years. Shapiro has gone so far as to demand more state oversight over the organization and has threatened that Pennsylvania could explore leaving the regional grid if structural reforms are not implemented to protect consumers from what he terms unjustifiable price spikes.
However, grid experts and PJM officials present significant objections to the Governor’s narrative. They argue that the sharp price increases are a necessary market signal intended to incentivize the construction of new power plants. According to PJM, the reliability of the entire 13-state network is at risk due to a “perfect storm”: traditional fossil fuel power plants are retiring faster than they can be replaced, just as data center energy consumption creates unprecedented strain. PJM supporters contend that artificial price caps suppress the investment needed to build new generation capacity, potentially leading to future blackouts during extreme weather events.
Background information indicates that Northern Virginia, part of PJM’s territory, hosts the world’s largest concentration of data centers, further stressing the transmission lines that run through the mid-Atlantic. PJM’s most recent long-term forecast predicts peak load growth of over 30 gigawatts by 2030, a figure that has forced the organization to delay auctions and rethink its modeling. While Shapiro views the cost hikes as a failure of management, PJM maintains they are a reflection of simple supply and demand in a grid transitioning away from coal while simultaneously attempting to power the digital revolution.
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