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Virginia Gov. Abigail Spanberger has joined seven other governors in the PJM Interconnection territory in pushing the regional grid operator to adopt policies and regulations that help shield ratepayers from shouldering the cost of increased power demand largely driven by data centers.
Members of the governors’ staff met with PJM representatives March 27 to discuss how to achieve power reliability while also ensuring efficiency of the energy infrastructure already in place and savings for customers.
“Balancing both affordability and reliability are foundational to PJM’s very existence,” the governors wrote following the meeting.
PJM has faced recent criticism for delays in bringing power generators onto the grid, largely clean energy sources. The grid operator has been working through policy changes to speed up that process and manage the skyrocketing price of the capacity energy auctions.
The governors’ letter lays out different ways that PJM can adopt policies that ensure that costs are borne by high-load customers that are driving the grid strain, and not residential customers.
One of their recommendations is that new data centers should have to pay for backstop capacity costs. Virginia is one of the few states that has created a specific rate class for high-load customers like data centers. Dominion Energy now has specific payment requirements for these customers that are aimed at protecting residential ratepayers.
Every year, PJM holds a capacity auction so companies can be prepared to provide the estimated power demand in future years.
PJM calculates how much power will be needed on high use days and adds some in reserve. Then, energy providers can bid to provide that power until PJM meets the target estimation. Those funds paid to the bidders come from consumers through their utility bills. In recent years the capacity auction prices have reached record levels.
The state executives also suggested ensuring that if data centers default or PJM over-projects for capacity needs, customers won’t be on the hook for those costs.
“This is in keeping with the White House Ratepayer Protection Pledge, which we strongly support, where participating data centers have agreed to pay the full costs associated with building new power supply and delivery infrastructure, whether they use these assets or not,” the letter reads.
The 13 states and Washington D.C. that make up the PJM territory are all testing legislative strategies to manage rising utility costs. Spanberger has already signed a handful of bills that are intended to offer short-term and long-term cost relief.
Her messaging reflects some of the demands that her predecessor Gov. Glenn Youngkin had expressed alongside the same governors in PJM, such as lowering costs and ramping up bringing power onto the grid.