PJM files backstop auction plan at FERC to meet capacity shortfall

PJM, the grid operator serving 13 mid-Atlantic and Midwest states plus Washington, D.C., is asking federal regulators to approve a special auction this fall to buy more power supply. The grid came up 6.8 gigawatts short of its target in its last capacity auction, largely because data centers are demanding much more electricity than expected. PJM says data center and other large-load demand could grow by up to 70 gigawatts by 2038. The auction would run from September 30 to October 21, with results announced by December 2, and PJM could pay up to $20 billion for new power plants to serve data centers built through 2027.

If you live in a PJM state, this matters because someone has to pay for that new power supply, and it usually shows up on electric bills. PJM is proposing a much higher price cap for this auction than its last one, and the costs would be divided among PJM zones and then passed to utilities and other electricity providers within those zones. PJM says the plan only works if states take steps to shield regular customers from paying for capacity that mainly serves data centers, so how much this costs you may depend heavily on rules your state sets.

Separately, PJM plans to file a related proposal that would let it cut power to large data centers that don't have their own backup power supply during grid emergencies, starting with facilities built after June 1, 2027. That's meant to protect reliability for everyone else, including homes, if the grid gets stretched thin.