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The independent market monitor of PJM Interconnection, America’s largest electricity market spanning some or all of 13 states from the Jersey Shore to Chicago, took advantage of its latest annual report to share eye-popping figures on how data centers raise electricity costs and lambast existing proposals to fix it.
“Data center load growth is the primary reason for recent and expected capacity market conditions, including total forecast load growth, the tight supply and demand balance, and high prices,” the independent market monitor said in the report, released Thursday. Some PJM states like New Jersey and Maryland have seen some of the fastest retail electricity price hikes in the country, in part due to spiraling costs stemming from capacity auctions, in which generators bid to be available when the grid is stressed. Capacity prices have risen from $29 per megawatt-day to the statutory cap of around $330 in just a few years, costing ratepayers some $46.7 billion over the past three auctions. The total from the three prior auctions: $8.3 billion.
The independent market monitor has used its regular reports and ad hoc commentary to blame data centers for the price boom over the past few years, and its 2025 annual report was no different. “Inclusion of existing and forecast data center load growth resulted in a combined total increase in capacity market revenues” of just over $23 billion, the market monitor wrote of the past three auctions. “Large data center load additions have already had a significant and irreversible impact that will be paid through May of 2028 and will have additional significant impacts on other customers as a result of higher transmission costs, higher energy market prices and higher capacity market prices,” the report said.
The assessment comes at a moment of turmoil for PJM, which has endured pressure from energy regulators and the White House to reform itself in order to bring on more generation more quickly. Some other proposed solutions to PJM’s price woes include coming up with new rules that encourage data centers to bring their own electricity generation, co-locate with existing or planned generation, or to operate more flexibly to avoid calling on the grid at peak demand times. The White House and PJM states even called for a special auction in the system to procure $15 billion of new generation, with a proposal for how the auction would actually run expected in April, according to Julien Dumoulin-Smith, an analyst at Jefferies.
The market monitor used the report to promote its own position: That data centers should bring their own generation, and that they should have their own “expedited fast track load and generation interconnection process.” Data centers that don’t bring their own generation should then have to put up with mandatory supply curtailment by the grid in moments of peak demand.
The market monitor argued that this proposal was consistent with the White House and PJM governors’ agreed-upon principles, as well as the “ratepayer protection pledge” drawn up by the Trump administration and signed onto by most of the country’s big players in artificial intelligence to protect utility customers for higher costs stemming for data center development.
In language more stirring than is typical for a report on market operations for a regional transmission organization, the market monitor called for preserving the market-like structure of PJM and the principle that all customers be served on the grid.
“All loads should be served,” the report said. “All loads should be served reliably. The process for adding large data center loads should be transparent. All loads should benefit from competitive markets.”
