The mid‑Atlantic is seeing sustained electricity price pressure as explosive data center demand outpaces current supply. PJM capacity auctions have hit record highs, and a price cap was imposed after a lawsuit by Pennsylvania's governor. Experts warn the imbalance may last several years, leaving roughly 65 million people facing higher bills while an estimated $11–$12 billion in grid upgrades may be required. Regulators and industry groups say coordinated action is needed to avoid prolonged affordability and reliability problems.
Data Center Boom Sends Mid‑Atlantic Electricity Bills Soaring — No Quick Fix
National Grid electric meter on Friday, Sept. 20, 2024, at a home in Delmar, N.Y. - Will Waldron/Albany Times Union/Getty Images/File
Residents across mid‑Atlantic states — including Maryland, New Jersey and Pennsylvania — are facing higher electricity bills as a surge in data center demand outstrips the region's available generation and transmission capacity. Short‑term relief looks unlikely.
At the heart of the pressure is PJM Interconnection, the nonprofit regional grid operator that runs capacity auctions to ensure there will be enough power when it is needed. Recent auctions have reached record prices as data centers — concentrated in Virginia and expanding in Maryland, Ohio and elsewhere — secure rights to future electricity faster than new supply can be built. Market prices in the region have risen by more than 1,000% over the past two years.
Why Prices Are Rising
Utilities and grid managers are buying capacity in advance because they expect a sharp increase in large industrial loads, particularly from data centers. Those forward purchases are pushing auction prices higher as bidders compete for limited future capacity. A price cap was applied at a recent auction after Pennsylvania Governor Josh Shapiro filed suit, but even with that intervention the auction fell short of the capacity PJM says is needed for reliable service.
"I expect the supply scarcity will last a few more years and that most of the 65 million people in the region will be paying higher bills for that long," said Rob Gramlich, CEO of Grid Strategies LLC. He added it was regrettable that states and PJM had not done more to shield consumers from volatile power markets.
PJM reported that the latest auction procured roughly 134,479 megawatts of capacity — still below the level PJM estimates is necessary to ensure regional reliability. PJM's incoming chief operating officer, Stu Bresler, warned that data centers' demand continues to outstrip new supply and called for coordinated action involving PJM, industry stakeholders and state and federal partners.
Costs And Who Pays
Building new power plants and the transmission lines to deliver electricity is expensive. Over the past two years PJM has proposed more than $11 billion in electrical infrastructure upgrades aimed largely at serving new data center load, and Maryland's People’s Counsel estimates another roughly $12 billion could be required soon. Those costs are typically socialized across ratepayers, which means residential customers will shoulder much of the bill even though the rapid demand growth is driven primarily by data center development.
Industry groups representing generators say their focus is on bringing new generation online, but developers and grid planners note that data centers can be built and connected faster than new supply resources such as power plants and major transmission projects. That timing mismatch keeps upward pressure on prices.
Regulatory Pressure
Governor Josh Shapiro has urged the Federal Energy Regulatory Commission to require reforms at PJM to better protect consumers from escalating costs. In a filing, he warned that if reforms are not implemented within a year the commonwealth may take further action to protect ratepayers from unjustifiable price spikes.
What Comes Next: Policymakers, regulators, the data center industry and grid operators must coordinate on short‑term consumer protections and long‑term investments in generation and transmission to ease the imbalance. Without faster development of new supply and strategic planning, experts say higher bills and reliability risks could persist for several years.
