Maryland’s ratepayer protection agency is fighting on two fronts simultaneously to shield households from paying hundreds of millions more in costs related to projected power demand—much of it linked to data centers that may never get built.
In recent weeks, the Office of People’s Counsel has asked federal regulators to reject regional grid operator PJM Interconnection’s plan to procure additional power to ensure grid reliability. In case that fails, OPC also asked Maryland’s utility regulator, the Public Service Commission, to shield ratepayers by acting before the capacity procurement is locked in on Oct. 21.
PJM, which runs the electricity grid for 67 million people across portions of 13 states and Washington, D.C., asked the Federal Energy Regulatory Commission (FERC) on July 31 for permission to buy 6,831 megawatts of generating capacity, which represents the shortfall from its last auction, for the delivery year starting in June 2028.
Of the total proposed procurement, PJM has initially assigned Maryland’s two utility zones 135.4 megawatts—116.5 megawatts to Potomac Edison and 18.9 megawatts to Baltimore Gas and Electric. OPC estimates that Maryland consumers could face as much as $562 million in added costs over 15 years if PJM got the entire capacity target at the maximum proposed price. Opt-outs from utilities and other adjustments could reduce both the procurement target and Maryland’s obligation.
In its protest, filed with FERC jointly with consumer advocates from Delaware, the District of Columbia, Illinois and New Jersey, OPC argues that PJM has not demonstrated that its proposal, known formally as a “Reliability Backstop Procurement” or RBP, is necessary. The consumer advocates also say that PJM’s plan does not adequately protect existing customers if the anticipated data centers are delayed, canceled or moved elsewhere.
In its state filing, OPC asked the Maryland Public Service Commission (PSC) to take a separate action while FERC weighs the larger proposal. Citing the state’s recently enacted Utility RELIEF Act, OPC argues the commission could require data centers to participate in programs that reduce electricity use during peak demand—known as “peak shaving.” If Maryland utilities report that demand to PJM by Oct. 21, OPC states they could qualify for an opt-out and reduce or eliminate the associated backstop costs assigned to their existing customers.
Maryland People’s Counsel David Lapp said waiting for FERC to rule could leave the commission too little time to act.
“The risk of the PSC waiting to act is that FERC accepts PJM’s RBP filing as is or substantially the same as proposed,” Lapp said. By then, he said, PJM could be moving ahead with 15-year capacity commitments that Maryland customers would have to pay for if projected data center demand does not materialize.
OPC has asked the commission to require peak shaving for all projected 2028 data center demand that is not backed by binding commitments to cover the resulting backstop costs. It is also seeking an interim order regarding the new data center growth projections Maryland utilities must submit to PJM by Sept. 4.
Those forecasts should include only those projects that are most certain to proceed and whose developers have committed to paying for the generation, transmission and other infrastructure built to serve them, OPC said.
Experts say the point that remains problematic is what would happen if utilities forecast a large increase in demand, PJM purchases generation to meet the projection and some of the projects never come online. According to OPC’s state filing, none of the seven Maryland data center projects included in the relevant forecast have a formal agreement with a utility. Until such an agreement is signed, the developers could abandon their projects or move them elsewhere without having to pay for the cost of capacity and infrastructure their projects triggered.
Abe Silverman, an assistant research scholar at Johns Hopkins University’s Ralph O’Connor Sustainable Energy Institute, said the compressed schedule makes it necessary for the state and federal proceedings to move in parallel.
“The dollars are big, time is limited and the risk severe,” Silverman said in emailed comments. “Waiting is not an option.”
Silverman said OPC’s $562 million estimate is reasonable, even though it assumes PJM buys the entire 6,831-megawatt shortfall at or near the maximum price allowed under the proposed procurement. PJM has already identified the quantity it wants to buy, he said, and the eventual bids could reasonably be expected to approach the price cap.
PJM spokesperson Jeffrey Shields said the procurement is needed to address a capacity shortfall for the 2028-2029 delivery year, adding that the proposed 15-year contracts are consistent with principles advanced by the governors of PJM states, including Maryland, and the White House National Energy Dominance Council.
In emailed comments, Shields said PJM’s filing gives states room to develop cost-allocation rules reflecting the White House Ratepayer Protection Pledge, under which utilities and data center companies committed to adding no new costs to existing ratepayers.
“The region needs substantial new investment in supply, and the central affordability question is how the costs of that investment should be allocated,” PJM’s board said in a letter outlining the procurement.
The grid operator said federal officials, state leaders and large electricity users have agreed that new large loads should bear the costs they cause. “Because PJM does not have jurisdiction to allocate retail costs directly to individual data centers, state action will be essential,” the board said.
But OPC in its protest says costs would be assigned to utility zones initially, potentially leaving households and other existing customers on the hook for costs if states fail to move them to the data centers that prompted the procurement.
The consumer advocates also challenged the proposed 15-year term and the price cap. PJM has said five-year bilateral contracts could help address the reliability shortage, OPC noted, while proposing commitments three times as long for the backstop procurement. They also argue that PJM’s “excessive price cap [is] based on a (higher) one-year cost, not a (lower) 15-year cost, despite PJM’s acknowledgement that a 15-year price lock ‘creates revenue certainty’ and improves financing opportunities.”
Silverman said those objections are substantial, but he expects FERC to approve the basic framework because the proposal has received broad support from PJM governors and the Organization of PJM States, which consists of utility regulatory agencies across the PJM footprint. Any changes the commission orders are more likely to occur at the margins rather than altering the contract term or other central features, he said.
Jon Gordon, a senior director at the renewable energy trade group Advanced Energy United, agreed that OPC’s arguments are unlikely to persuade FERC given the tight schedule. “Unless FERC approves the PJM proposal in its totality there won’t be time left to make changes and have a September auction,” he said.
“We are in uncharted water here.”— Jon Gordon, Advanced Energy United
Gordon described the competing risks OPC identified in its filings as “stark but accurate.” On the one hand, PJM must prepare for the possibility that projected data center demand does materialize, he said, but the same proposal could also commit existing customers to pay for capacity procured for cancelled or delayed projects. More carefully designed approaches might allow new generation to be built while fully protecting consumers, Gordon said, adding that “in the rush to get this done, there hasn’t been time to flesh out those potential ideas.”
Efforts by individual states to shield their customers could shift financial exposure to other states in PJM’s territory, Gordon said, because costs ultimately must be assigned to someone under the traditional utility model. “We are in uncharted water here,” Gordon cautioned, warning that disputes among states over who pays could further strain PJM’s regional market structure.
One alternative OPC and other consumer advocates endorsed is a “subscription-based” procurement in which the utilities or suppliers serving data centers are responsible for all the associated financial obligations.
Gordon said PJM discussed the voluntary subscription model supported by OPC, but such a system would be complicated to design and administer, and PJM concluded that it needed a mandatory mechanism to address the immediate capacity shortfall. A voluntary model would also require protections against the possibility that subscribers default on their commitments, he added.
PJM separately filed its Interim Resource Adequacy Service proposal with FERC on Aug. 13. Under that proposal, certain new large loads that didn’t bring their own capacity or did not obtain capacity through the backstop procurement could be required to reduce their electricity use when supplies become dangerously low.
The PSC proceedings are rooted in Maryland’s 2025 Next Generation Energy Act and the Utility RELIEF Act, enacted to develop protections for existing customers from data-center-related costs. OPC is urging the commission to use that authority before the Oct. 21 deadline that will affect Maryland’s opt-out and allocation status. PJM’s proposed schedule calls for procurement commitments to be finalized by Dec. 2.
