Governors push for more sway over biggest US grid as power bills surge

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By Laila Kearney

NEW YORK (Reuters) -Governors of more than a quarter of U.S. states on Monday pushed for greater influence over the country’s biggest power grid — PJM Interconnection — where electricity prices are surging as demand driven by AI data centers outpaces the connection of new supplies.

“This is a crisis of not having enough power,” Virginia Governor Glenn Youngkin said on Monday. “This is a crisis in confidence.”

Youngkin made his remarks at a gathering of governors in Philadelphia, where he called on PJM to re-open its process for nominating board members. Youngkin and other governors want their states to have more say in how PJM operates.

Rising power bills in PJM, which operates the grid covering 13 states and the District of Columbia, or one in five Americans, have led to a political backlash over the last year and threats by some governors to abandon the regional grid.  

PJM currently is a member-run organization in which states do not have a vote.

Youngkin, whose state is the world’s epicenter for data centers, said PJM’s electricity demand forecasts have been fundamentally wrong, undershooting the swell in demand for power by artificial intelligence.

Ballooning prices in PJM have been caused by a confluence of factors, including the cost to produce and transport electricity and a surge in demand brought by Big Tech data centers. PJM’s territory holds the largest concentration of energy-intensive data centers in the world. 

Capacity payments, which are made to power plant operators to guarantee they run during periods of spiking demand to avoid blackouts, are a piece of power bills in the region. 

Those payments, determined by annual energy auctions, have risen by about 1,000% over the last two auctions on the projected rise of data center demand coupled with largely stagnating power supply.

PJM is governed by a board of managers, and its voting members include transmission line owners and independent power plant operators.

While states are not given a vote, they have wielded their power over PJM in other ways. Pennsylvania Governor Josh Shapiro led a successful push to put a price ceiling and floor on PJM’s most recent capacity auction. 

Governors are seeking a more formal role in shaping PJM that might be modeled after similar groups in Midwest and New England grids.

(Reporting by Laila Kearney and Tim McLaughlin; Editing by Chizu Nomiyama and Franklin Paul)