An energy auction conducted by a giant grid operator is expected to result in additional costs of $6.3 billion borne by consumers and businesses, due to the energy needs of data centers, writes the NYT.
On Tuesday, PJM, the largest electric grid operator in the country, published the results of an electricity auction that will lead to a $6.3 billion increase in the bills of millions of households and businesses over the next three years, an increase due to the growing energy demand of data centers.
During the annual auction, electric companies offered the prices they were willing to accept to supply electricity to PJM during peak demand times. These prices are then considered to determine the electricity rates applied to customers on the grid in 13 eastern states and the District of Columbia. In a statement, PJM said that data centers were increasing electricity demand across the region.
“These auction results demonstrate that electricity demand continues to grow faster than supply,” said David Mills, president and CEO of PJM, in a press release regarding the auction results. “We are working with government and industry leaders on multiple fronts to restore this balance, introducing new generation as quickly as possible and managing load growth on the grid.”
In recent years, citizens and politicians have expressed growing frustration with PJM’s activities due to the steady rise in electricity prices. At the same time, anger over data centers has spread across the country. On Tuesday, the State of New York announced the first statewide moratorium on the construction of these gigantic facilities, a one-year pause to assess their environmental impact and energy consumption. PJM’s electric grid supplies power to 67 million people, from Virginia Beach to Chicago. The energy systems network includes the largest cluster of data centers in the world, located in Northern Virginia.
“Demand growth will not stop,” said Patrick Cicero, a former consumer advocate appointed by the state of Pennsylvania and now a consultant for the Pennsylvania Utility Law Project, which assists low-income consumers. “Ultimately, high prices will remain.”
In its role as regional grid operator, PJM effectively determines a significant portion of retail electricity rates, but governors and regulatory bodies they appoint have little influence over it. PJM is regulated by the Federal Energy Regulatory Commission (FERC), not by state legislators.
PJM’s annual auctions help determine electricity costs for the two years following the auction. Since 2024, the auctions have resulted in an overall increase in costs for all electric service users in the region served by PJM, amounting to about $29 billion, due to data centers, according to Monitoring Analytics, PJM’s independent market monitoring organization. Monitoring Analytics also estimated a $6.3 billion cost increase following the latest auction, held on June 30. The high costs have so irritated Pennsylvania’s Democratic governor, Josh Shapiro, that in December 2024 he sued PJM. Shapiro and PJM reached an agreement that set a maximum cap on the auction price, saving consumers billions of dollars. PJM’s electric grid has often had only a thin margin of excess energy reserve during extreme weather events, such as the recent heat wave that sent temperatures soaring across the East Coast.
Mr. Shapiro and other governors have complained that PJM has been too slow in connecting more power plants, solar and wind facilities, batteries, and other resources that would help reduce prices and ease pressure on the grid. PJM’s grid serves all or part of New Jersey, Pennsylvania, Delaware, Maryland, Virginia, West Virginia, North Carolina, Tennessee, Kentucky, Ohio, Indiana, Illinois, and Michigan, as well as the District of Columbia.
(Excerpt from the press review by eprcomunicazione)
