Rise of data centers prompts Pennsylvania to seek more say in regional grid operations

Pennsylvania moved Wednesday to bring more transparency to the region’s electrical grid operator as the number of data centers increases in the state. Many blame power-hungry centers for rising energy costs.

A bill that is part of the state budget deal calls for state reviews of some operations by PJM Interconnection, an independent organization that manages the electrical grid for all or part of 13 states, including Pennsylvania and New Jersey.

“The current process by which utilities submit information to PJM lacks transparency for policymakers, regulators and stakeholders,” the bill states.

PJM says it supports and has “recommended creating a review process for Pennsylvania and other states to help vet requests by data centers and other large electricity users looking to connect to the grid, to help make PJM’s load forecasts as accurate as possible,” according to a statement.

PJM has been the focus of intense scrutiny by states in recent months, especially as residential customers have seen their energy bills spike.

Part of the rise in electric costs has been attributed to a demand for more infrastructure to cope with anticipated needs of massive data centers being built and proposed throughout the region.

In Pennsylvania and New Jersey this summer, some consumers saw record-high bills. Part of those bills is determined by PJM capacity auctions.

As a regional transmission organization, PJM is independent of states and acts as a sort of traffic officer in how high-voltage power gets shared through the grid, a system of power plants, transmission cables, substations, and other infrastructure.

One of its primary jobs is to ensure wholesale electricity flows safely and reliably during times of high demand and severe weather without resulting in blackouts or other disturbances.

As a result, PJM has to make sure there is enough capacity in the system to handle current and future loads. Data center proposals have dramatically increased the need for not only more power generation, but also the infrastructure to handle it.

PJM holds capacity auctions that seek to account for future capacity, and the auctions can influence how much homeowners pay on their electric bills. It relies on forecasts from utilities about their future load needs.

Pennsylvania Gov. Josh Shapiro and other governors have been highly critical of PJM’s process, which they call opaque. Consumer advocates have cast doubt that some of the large data centers being incorporated into capacity pricing will ever get built.

Shapiro helped host a daylong conference of governors and PJM this fall at the National Constitution Center, where complaints arose.

As part of that, experts questioned how PJM determines capacity and whether much of the projections of the needs of future data centers might never come to fruition.

The new bill, introduced Wednesday, would give the Pennsylvania Public Utility Commission (PUC) some oversight to ensure accuracy and transparency of load forecasts and to coordinate with PJM.

It charges the PUC with reviewing and validating load forecasts submitted by PJM. It authorizes the PUC to coordinate with PJM and other states to plan and gives the agency permission to access confidential agreements with utilities.

“There is a need for oversight by the Pennsylvania Public Utility Commission to ensure accuracy and transparency of load-forecast inputs and to coordinate with PJM and other states to avoid duplicative counting of projects and customer contracts,” the bill states.

The bill gives the PUC authority to review requests for large-load connects to the grid and make sure “that only projects with a high likelihood of development are included in a forecast.”

It calls on the PUC to file an annual report by June 30 to legislators.

Staff writer Gillian McGoldrick contributed to this article.