Maryland State Senator Katie Fry Hester has initiated a multistate, bipartisan collaborative to press PJM Interconnection on its handling of surging data center electricity demands, as the regional grid operator nears a decision on allocating more than $100 billion in related costs.
The effort, announced October 21, targets PJM’s Critical Issue Fast Path process, an expedited review set to shape transmission rules and capacity auctions affecting 67 million customers across 13 states and the District of Columbia. Legislators from the region plan to engage PJM over the next four weeks, culminating in a board vote November 19 on a proposal for filing with the Federal Energy Regulatory Commission.
PJM, which coordinates electricity transmission for Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia and the District of Columbia, faces 32 gigawatts of new data center load by 2028. That expansion, driven by artificial intelligence and cloud computing, equates to adding the power needs of several major cities to the grid.
The first meeting of the PJM State Legislators Collaborative occurs Wednesday at 4 p.m. Eastern time, with participation from Dr. Joseph Bowring, PJM’s independent market monitor, and other specialists. Topics include cost and reliability risks to residential users, PJM’s proposed fixes and ways to bolster the PJM Governors’ Collaborative, formed in September. As of 3 p.m. October 21, 12 states and the District of Columbia had signed on.
“This decision will have far-reaching impacts beyond Maryland and the PJM region,” Hester said. “PJM’s filing with FERC, and FERC’s pending decision, will set a precedent for how the entire country manages the costs of massive new energy demands. State leaders must act now to avoid a massive transfer of wealth from residential ratepayers to large energy generators and data centers.”
Hester, a Democrat representing Howard and Montgomery counties, co-chairs the National Conference of State Legislatures Natural Resources, Energy and Environment Committee, which counts more than 500 members. At its August summit, the group approved a near-unanimous resolution on data center effects on power generation and grid resilience. The measure calls for federal regulators to avoid overriding state authority, ease burdens on ratepayers, promote coordinated planning and develop equitable cost allocation among stakeholders.
The Natural Resources Defense Council projects that without reforms, PJM-area residents could face $163 billion in added electricity expenses through 2033, with average households seeing about $70 monthly increases by 2028. Data centers already drove $9.4 billion of the prior capacity auction’s costs, a figure likely topping $10 billion in the most recent round.
PJM launched the CIFP in September to tackle these pressures, proposing measures like a fast-track interconnection queue for up to 10 large projects of at least 500 megawatts each, completable in three years. Developers would post cash deposits or letters of credit, and utilities must report overlapping requests to refine forecasts. The board’s November decision will influence the June 2026 capacity auction and the 2028-2029 delivery year, dictating cost distribution for grid upgrades.
Stakeholder input shapes the process. The independent market monitor recommends data centers secure their own generation or storage to offset reliability strains, arguing current rules bar interconnections that hike system-wide costs without adequate capacity. Bowring’s analysis shows one proposed facility alone could add $16.6 billion to capacity revenues for 2025-2027 auctions.
The Maryland Office of People’s Counsel, which advocates for utility customers, warned October 14 that data center projections for 2026 have ballooned, with 32 gigawatts eyed for 2028 — a 68 percent jump from prior estimates — and 60 gigawatts by 2030, up 83 percent. Such forecasts, based on varying utility standards, risk overbuilding transmission and capacity, stranding assets if projects falter amid supply chain issues or efficiency gains. The office urges uniform verification of commitments, like binding contracts and financial assurances, plus probabilistic forecasting to curb speculation.
NRDC advocates a “bring your own capacity” model, where new loads enter a non-coincident bulk load pool for curtailment during shortages until they contract dedicated resources. This includes incentives for flexibility, like demand response participation, and reinstating holds on planned generation to avoid auction distortions.
Industry voices weigh in too. The Ohio Manufacturers’ Association, speaking for 1,300 firms, urged PJM in July to enhance transparency in load forecasting and auctions, citing risks from unsubstantiated projections that inflate bills without reliability gains. The group pushes for multiple adequacy models incorporating diverse assumptions to inform planning.
The PJM Governors’ Collaborative, launched September 22 at a Philadelphia summit convened by Pennsylvania Governor Josh Shapiro, fosters state coordination on these challenges. Signatories, including North Carolina Governor Josh Stein and Ohio Governor Mike DeWine, aim to build joint strategies, share technical insights and engage regulators without binding members or overriding state powers.
In Maryland, data center growth clusters in areas like Frederick, though transmission constraints there remain low. State utilities must now disclose PJM votes under a 2025 law sponsored by Hester, Senate Bill 909, to boost accountability. Southern Maryland residents, served by utilities like Southern Maryland Electric Cooperative, face indirect effects through regional auctions that could lift rates 10 to 20 percent if costs shift to general loads.
PJM formed in 1927 as a voluntary coordination pact among utilities, evolving into a FERC-regulated entity in 1997 to manage wholesale markets. Its capacity auctions, held three years ahead, secure power commitments; the latest, for 2028-2029, cleared at $329 per megawatt-day, up from $28.92 two years prior, largely due to data forecasts.
FERC approval of PJM’s filing, expected early 2026, will guide implementation. States like Maryland, with clean energy mandates targeting 50 percent renewables by 2030, monitor for alignment with decarbonization. Hester’s collaborative builds on her committee role, where she has advanced bills on grid modernization and ratepayer protections.
