Inside Climate News reports on Maryland's multi-state, bipartisan effort to protect consumers from anticipated rate increases at PJM Interconnection. United's Jon Gordon spoke to the various factors behind higher energy costs, encouraging collaboration between the utility and state leaders to ensure the provision of affordable and reliable electricity for ratepayers.
Jon Gordon, senior policy director at the trade association Advanced Energy United, said PJM was technically correct that states retain authority over retail rate-setting, but that doesn’t mean PJM’s process doesn’t affect costs.
“There’s clearly a big piece of the ratepayer bill that originates from PJM,” he said. “Once PJM’s capacity auction prices are approved by FERC as ‘just and reasonable,’ the states get the bill … there’s no getting around that.” He explained that state regulators can decide how to spread those costs among customer classes over time, but “the size of the bill comes from PJM.”
This is why the collaboratives matter, Gordon said, explaining that legislators are fighting to influence that number before it reaches their public service commissions.
The new groups reflect a growing awareness among states that PJM’s decisions could leave them footing the bill for billions of dollars in grid upgrades, Gordon said. But he cautioned that while these alliances can exert pressure and improve customers’ understanding of cost allocation, their role remains largely advisory.
“These groups are doing more than just writing letters,” he said. “They’re on the stakeholder calls, arguing in real time for ratepayer protections … but the truth is, not all of this will be resolved in one fast-tracked process.” He described the legislators’ engagement as “a good and necessary shift,” noting that Hester and others have become “active voices on these highly technical calls that run for hours, hashing out solutions.”
Maryland’s electricity prices have surged in recent years, and PJM’s proposed upgrades, driven largely by the expected 32 gigawatts of new load demand from data centers, could push bills even higher.
“The default right now is that ratepayers are already paying,” said Maryland Del. Lorig Charkoudian (D-Montgomery County), saying that PJM was operating like a “shadow government” whose opaque markets “run roughshod” over state policy on affordability and climate. “Despite all of our best efforts and what we do at the state level, PJM, because of the nature of the markets, has the ability to override our policy. That’s why this collaborative is so important—to make it clear that we need PJM to act on this.”
Gov. Wes Moore last year vetoed a bill calling for a multiyear study of the environmental impacts of data centers, arguing that the state couldn’t afford it. A year earlier, he had exempted data centers from a key Public Service Commission environmental review, seen as a signal to make Maryland more appealing to corporate developers seeking quick approvals and lower operating costs.
But states’ intent to attract data centers has slammed against a stubborn economic reality.
“They’re mad at PJM, not only for rates being so high but also for slamming the door on data center development,” said Gordon from Advanced Energy United. “You can’t have it both ways.”
He added that most data-center developers have now accepted they’ll need to “bring their own generation,” calling it a costly and time-consuming proposition that could reshape the region’s energy landscape. “At the end of the day, data centers are going to have to pay for most of this,” he said. “Their biggest issue isn’t the money—it’s speed.”
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