PJM looks to implement key data center regulations, Maryland energy stakeholders have mixed feelings
PJM, the regional electric grid operator, has submitted two key proposals to federal regulators aimed at curbing energy costs for ratepayers by regulating data center power consumption. The first proposal creates a special energy auction for large data centers, while the second establishes a framework for curtailing data center power during grid stress. Maryland energy stakeholders have mixed reactions, with some concerns that residential customers could still bear costs.
PJM, the regional electric grid operator for Maryland, Washington D.C., and 12 other states, has submitted two proposals to the Federal Energy Regulatory Commission (FERC) aimed at addressing the surging electricity demand from data centers and protecting ratepayers. These proposals seek to reform how data centers secure energy and manage their grid impact.
The first proposal, the Reliability Backstop Procurement (RBP), would establish a separate energy auction specifically for large data centers. This initiative, supported by figures like Claire Lang-Ree of the Natural Resources Defense Council (NRDC), intends to ensure data centers bear the full cost of their energy supply, preventing residential customers from subsidizing them. However, Maryland's People Counsel David Lapp and the Maryland Office of People’s Counsel (OPC) oppose the RBP, arguing it could still leave ordinary customers responsible for over half a billion dollars in costs if anticipated data centers do not materialize in specific PJM zones. Lapp's office has urged FERC to reject the RBP, suggesting alternative mechanisms to safeguard ratepayers.
The second proposal, the Interim Resource Adequacy Service (IRAS), is viewed more favorably by advocates. IRAS would create a framework enabling data centers to be curtailed, or shut off, during periods of extreme grid stress, such as hot summer days when power supply is limited. Maryland State Sen. Katie Fry Hester praised IRAS for ensuring that large new loads contribute to their own power support. If approved, IRAS would take effect by June 1, 2027, addressing a projected supply shortage in the PJM grid.
Despite some support for IRAS, concerns persist regarding the timeliness of these measures. Critics, including Lang-Ree and Sen. Hester, point out that the RBP's impact on energy bills won't be felt until 2030 due to the nature of PJM's three-year forward capacity auctions. Additionally, Lapp noted that while IRAS addresses peak demand, it doesn't mitigate the continuous, 24/7 power consumption of hyperscale data centers that drives up overall energy market costs. FERC is expected to make a decision on these proposals soon, with the RBP auction slated for September.