Watchdog warns that PJM's approval of data centers could result in power outages for other customers

An independent market monitor has urged federal regulators to compel PJM to place grid reliability above the rapid expansion of large data centers. The formal complaint, submitted on November 25 to the Federal Energy Regulatory Commission, comes as the nations largest grid operator faces mounting pressure to accommodate soaring data center demand.

The filing argues that PJM is moving ahead with connecting substantial new data center loads despite being unable to guarantee dependable service to all customers. According to the complaint, such decisions could force either data centers or existing consumers to face outages, undermining PJMs responsibility to maintain a stable and reliable electrical system.

PJM oversees electricity flow for more than 65 million people across 13 states and the District of Columbia, coordinating power distribution over roughly 369,000 square miles. The watchdog contends that the rise of data centers has already driven up transmission expenses along with energy and capacity prices, noting that recent and projected data center demand increased PJMs capacity revenues by $16.6 billion in the last two auctions a trend expected to escalate further.

The complaint references a Critical Issues session held by PJMs Board of Managers to address concerns related to large data center loads. However, it claims the board failed to reach consensus due to widespread assumptions that PJM must accept all major new load requests. The filing seeks regulatory clarification affirming PJMs authority to require proof of reliable service capability before approving new data center connections.

A PJM spokesperson stated that the organization is still reviewing the complaint and declined to offer immediate comment. The spokesperson added that the Board of Managers plans to address the issues raised and is expected to outline forthcoming actions within the next several weeks.

Across the country, large-scale data centers have been contributing to rising utility costs, with particularly pronounced impacts in regions such as Virginias data center alley. A November assessment by the North American Electric Reliability Corporation reported that data centers are a major factor behind increasing winter electricity demand, heightening blackout risks.

In parallel, federal plans include a $500 billion investment initiative to build national AI infrastructure in partnership with major technology firms. Industry leaders have emphasized the need for substantial new power capacity including an annual addition of 100 gigawatts to ensure competitiveness in the growing AI sector.

Analysis: Balancing Grid Reliability and Data Center Growth

The recent complaint filed with the Federal Energy Regulatory Commission underscores a growing tension between the expansion of large data centers and the need for reliable electricity service. PJM, which manages power for over 65 million people across 13 states and D.C., is facing scrutiny for connecting new high-demand loads without fully guaranteeing system stability.

The filing highlights that data center growth has already contributed to rising transmission, energy, and capacity costs, with capacity revenues from these loads totaling $16.6 billion in the last two auctions. While PJM’s Board of Managers discussed these challenges in a “Critical Issues” session, the board reportedly did not reach consensus, reflecting an assumption that all major new loads must be accommodated.

The outcome of this regulatory review will likely shape how PJM balances new data center demand against grid reliability. With federal initiatives targeting $500 billion for national AI infrastructure and a projected 100 gigawatts of additional power needs annually, clear guidance on service guarantees before approving new connections is becoming increasingly critical.

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• Watchdog sounds the alarm that PJM's approval of data centers could leave other customers in the dark