Data centers drove $6.3B in PJM capacity auction costs: market monitor

If you live in the PJM grid region, which covers 13 Mid-Atlantic and Midwestern states plus Washington, D.C., data centers are a big reason your electric bill may be rising. PJM runs auctions where utilities buy "capacity" — a guarantee that enough power plants will be available to meet future demand. According to Joseph Bowring, president of the independent market monitor that watches over PJM's markets, data centers accounted for $6.3 billion, or 38%, of the $16.4 billion in charges from PJM's latest auction. Over the last four auctions combined, data centers drove $29.4 billion, nearly half of all capacity costs.

Bowring argues PJM isn't adjusting to this shift and that the added costs are landing on other customers, including homeowners. Big tech companies running data centers pledged at the White House in March to shield consumers from price increases tied to their energy needs, but Bowring says that's not achievable under PJM's current rules. He wants data centers to either contract for their own power supply or bid in a separate auction, so their costs don't get mixed in with everyone else's.

PJM's board is working on a plan for a separate "backstop" auction aimed at data centers, which it hopes to file with federal regulators this month, with the auction itself possibly happening in September. Nothing is decided yet, but the outcome could affect how much of your electric bill in the coming years is tied to data center growth versus your own household use.