By Laila Kearney
NEW YORK, May 11 (Reuters) – The U.S. state governor of Maryland Wes Moore on Monday pushed for reforms in PJM Interconnection, the largest U.S. electricity market, including long-term power contracts and a requirement that data centers pay for the costly infrastructure needed to serve them.
PJM Interconnection covers 13 states across the Midwest and Mid-Atlantic regions and is home to the world’s largest concentration of data centers. A supply crunch in the market has sent household power bills sharply higher and drawn growing political scrutiny.
“For too long, affordability and reliability have been framed as somehow competing goals… that somehow keeping the lights on tomorrow requires working families to pay crushing prices today,” said Moore in an address at the annual meeting of members of PJM Interconnection. “That is a false choice.”
PJM is weighing major changes to rein in data center demand and rebalance regional electricity supply after roughly two years in which demand from Big Tech companies for their server warehouses has outstripped the addition of new supplies on the grid.
PJM’s capacity payments, which act as an insurance to keep the lights running in times of high demand, have jumped roughly 1,000% over the last two years. Moore was among a group of governors who successfully pushed last year for a temporary cap on those prices.
A central pillar of PJM’s proposed reforms includes long-term and fixed-price contracting between suppliers and data centers.
While Moore and PJM’s members, which include utilities and power plant developers, agreed on the broad outlines of the reforms, they differed over the causes of the market’s volatility.
During a panel discussion, PJM said varying policies across states, including clean energy goals that have promoted wind and solar over gas and coal power plants as well as government intervention in its markets had scared off investors from making long-term commitments needed to build new power plants in the region.
Moore, and other governors in PJM, have argued that the grid operator has been too slow to add new generation while approving costly transmission projects that they say have failed to benefit their states.
PJM said it recognized the pressure caused by rising power bills in the region and that it was working to expedite the addition of more electricity supplies to the grid.
“This is a generational challenge that no one organization, state or industry can solve alone. It will take coordination across policymakers, grid operators, utilities, generators, and large energy users to help evolve the grid at the speed and scale this moment demands,” said PJM spokesman Jeff Shields.
Moore is due to sign the state’s Utility RELIEF Act on Tuesday, which is aimed at providing financial relief to utility customers through set-aside funds and other measures, including capping utility executive salaries.
(Reporting by Laila Kearney in New York; Editing by Sanjeev Miglani)
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