Major reforms necessary to address data centers’ costs and reliability impacts, OPC tells regional electric grid operator
BALTIMORE – Large customers, such as data centers, should face enforceable consequences if they connect to the regional electric system without resources sufficient to meet their own power demands and reliability requirements, the Office of People’s Counsel said in a proposal submitted this week to the regional grid operator PJM Interconnection LLC.
“Current PJM rules for the administration of its capacity market and transmission planning, without necessary reforms, will force residential customers to subsidize massive data center growth and leave them vulnerable to reliability problems,” said Maryland People’s Counsel David S. Lapp. “We are recommending critical changes that will save residential customers across PJM billions of dollars while protecting them from suffering the consequences of reliability issues caused by data centers.”
OPC submitted its proposal for changes in PJM rules that govern the PJM capacity market and transmission planning—the framework of which is supported by other state consumer advocates in the region—as part of a PJM-initiated process to address the challenges of data center development. The proposal outlines principles that PJM should implement to responsibly accommodate the power demands of large data centers without jeopardizing reliability or imposing massive costs on existing customers.
Key features of OPC’s proposal include:
- Large data centers must bring new capacity, sufficient to meet a reliability “reserve margin,” in the form of new generation or resources that reduce electric load on the system.
- The new capacity cannot be limited in its hours of operation, must be available locally, and must be available when the large data center comes on-line.
- PJM would subject data centers that fail to bring their own capacity to service interruptions in emergency conditions.
- The price cap adopted for the last capacity market auction and the auction scheduled for this December is extended through at least the following two auctions or until most of the new capacity to be added through PJM’s proposed fast-track interconnection process becomes available.
- PJM will initiate a process to require data centers to pay the regional and local transmission costs that they cause.
OPC’s proposal also would require PJM to implement improvements in its forecasts of data center load growth, including uniform, transparent, and verifiable criteria and commitments in order to include the data centers’ load in forecasts. These forecasts drive billions of dollars in spending on transmission infrastructure and also drive-up capacity market costs.
OPC’s proposal largely aligns with other proposals submitted to PJM—including a proposal submitted by a bipartisan group of state legislators—that would impose requirements on data centers to protect existing customers. Further alignment of these proposals may occur during the PJM process.
“Data centers are already causing electric bills to increase for Maryland customers, and they will cause billions of dollars in future costs for customers in the region unless state and federal utility regulation is updated and enhanced to address the unprecedent pace and scale of actual and projected data center growth,” Lapp said.
The Maryland Office of People’s Counsel is an independent state agency that represents Maryland’s residential consumers of electric, natural gas, telecommunications, private water and certain transportation matters before the Public Service Commission, federal regulatory agencies and the courts.
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