A bipartisan group of governors is pressing PJM Interconnection to design its proposed reliability backstop auction so that new data centers directly bear the cost of new generating capacity.
The governors call for consumer protections to be embedded in PJM's forthcoming filing to the Federal Energy Regulatory Commission (FERC), arguing that cost causation, not pooled markets, should govern how the grid responds to fast growing power demand from data centers, according to a letter sent 9 April to PJM chief executive David Mills.
PJM, the largest independent grid operator in the country covering 13 states and Washington, DC, has proposed a "reliability backstop auction" to address a looming shortfall of power supply as data centers and other large new loads drive demand beyond what the region's capacity market has been able to secure. For the first time, PJM failed to meet its reserve requirement in the 2027-28 capacity auction even as the price paid to power plants to reserve generation capacity soared by triple digits. The grid operator now projects a potential 50–60GW capacity gap over the next decade, driven primarily by large-load growth and long lead times for new generation and transmission. The backstop auction is intended as a one-off mechanism to procure capacity quickly enough to preserve reliability while broader market reforms are developed.
The governors are pressing PJM to assign backstop costs directly to new data centers wherever possible and calling for protections against stranded costs, warning that consumers must not be left on the hook if data center projects default or scale back.
"PJM should develop strong stranded-cost protection mechanisms to ensure consumers and other PJM members are fully protected," the letter states, noting the request aligns with the White House's Ratepayer Protection Pledge, under which participating tech firms commit to pay for power supply and delivery infrastructure whether they use it or not.
The governors urge PJM to remain flexible on near-term resource eligibility, particularly for the 2027-28 delivery year, given long construction times and looming reliability gaps.
"PJM must be technology-neutral and inclusive of all resources that can meet unforced capacity needs today," the letter said.
The letter was signed by the governors of Delaware, Illinois, Indiana, Maryland, New Jersey, Pennsylvania and Virginia, as well as the mayor of Washington, DC.
