Pennsylvania Governor Josh Shapiro said his state would leave America’s biggest power grid if its operator won’t make changes to rein in surging energy bills.
“If PJM is not willing to look in the mirror and really reform itself, then I’m willing to go my own way and Pennsylvania can stand alone in this effort,” Shapiro said Monday on Bloomberg Television, referring to grid operator PJM Interconnection LLC. “We can produce enough energy for us, and we can produce enough energy at a far quicker rate than PJM is able to right now.”
On Monday, Shapiro convened a summit at the National Constitution Center in Philadelphia after the cost of securing wholesale power supplies on the grid set a record for two straight years. It was the first meeting of its kind led by states. Shapiro, a Democrat, is pushing for PJM to make states an active part of the decision–making process while also increasing transparency and accountability.
“Meeting the demands of a rapidly changing energy landscape will require solutions that extend beyond any one institution,” PJM said in an emailed statement Monday. “It will require PJM, the industry and especially our states all working in concert.”
Even before the AI-power boom, electric costs were already rising to help rebuild aging grid infrastructure, fortify it against extreme weather, adjust to the rise of residential solar and meet increasing demand from electric vehicles. Now, data centers are adding further strain, with new facilities needing as much electricity as towns or even cities. And there are other factors affecting prices, including supply chain constraints and tariffs.
Shapiro also took a swipe at President Donald Trump, saying his moves to slow clean energy is making it harder for Pennsylvania to produce enough power.
“I’m an ‘all-of-the-above’ energy governor, I wish the president was an ‘all-of-the-above’ president,” Shapiro said, using a term that indicates support for both fossil fuels like natural gas as well as clean energy like wind and solar.
“We didn’t see this same energy from Governor Shapiro when Joe Biden declared war on America’s energy industry, giving preferential treatment to wind and solar,” White House spokesperson Taylor Rogers said. “President Trump is simply unleashing American energy dominance while ensuring no preferential treatment is given to certain energy types because of Biden’s Green New Scam.”
The grid operated by PJM, stretching from Virginia to Illinois, has become a bellwether for the ways that soaring demand for electricity has transformed power markets in the US and around the globe. As home to the world’s biggest concentration of AI data centers, the region is set to see power demand skyrocket, and costs are already starting to.
After PJM’s annual power sale yielded a record cost to secure supplies last year, Shapiro filed a lawsuit against federal regulators that resulted in a settlement that set a price cap on future auctions. But even with the cap in place this year, the price of power supply hit another record: $16.1 billion.
Joe Bowring, president of Monitoring Analytics, PJM’s independent watchdog, said on a panel at the summit that the question is how to draw the power supplies needed to serve data centers.
Simply “letting the market work will mean blackouts,” he said.
Responsibility for addressing grid issues and rising bills lies both with the market and the states themselves, PJM Chief Executive Officer Manu Asthana said in a fireside chat. He noted that even after power-plant projects make it through the approval process to connect to the grid, developers can face a “hostile permitting regime” within states. States can also be more proactive in planning for their supply needs, like Virginia, instead of relying primarily on grid auctions, he said.
“I think there is not a magic wand, we are going to have to work through it,” Asthana said.
While this isn’t the first time states or utilities have threatened to pull out of PJM, the latest threat carries greater urgency with the grid now at an “inflection point,” according to several panelists Monday. There was widespread frustration expressed at the conference — from policymakers and regulators to developers — that the status quo won’t build a grid of the future fast enough.
Earlier this year, New Jersey lawmakers passed legislation to consider leaving the PJM grid. Maryland state lawmaker Lorig Charkoudian said in an interview Monday that she would consider advocating to do the same in her state. It may make sense for the founding states of the grid — Maryland, Pennsylvania and New Jersey — to carve out a separate system, potentially with Delaware, she said.
An alternative to leaving PJM entirely would be to withdraw from participating in the supply auctions to procure supplies for Maryland through bilateral contracts, possibly by teaming up with neighboring states, according to Charkoudian.
Charkoudian said a solution depends on whether PJM starts to give states a bigger voice. One way to do that would be to allow states to initiate filings at the Federal Energy Regulatory Commission under Section 205 of the Federal Power Act, which would force PJM to take states’ concerns more seriously, she said.
Such authority would require the grid operator or a stakeholder to submit a filing to FERC for approval, said PJM’s Asthana. He said that PJM is open to conversations with states.
“This system no longer works for our residents, period, end of sentence. And we’ve got to change something,” Charkoudian said. If PJM is unwilling to reform to allow states’ voices to be heard, “then it is irresponsible of us not to say: What are the alternatives?”