The AI data center boom is driving up electricity prices. President Donald Trump is leaning on a power company to fix it.
Trump and a group of governors from northeastern states are calling on PJM Interconnection, the nation’s largest power grid operator, to hold a new power auction.
The goal is to allow major tech companies to foot the bill for new power plants. According to a release from the Department of Interior, a “coalition of leading technology companies” has committed to funding new generation capacity, though no companies are named.
“Make no mistake, if PJM, this faceless bureaucratic organization that is driving prices up on the American people, does not change, and does not reflect what we are putting forth here today, Pennsylvania will be forced to act, and forced to go at it alone,” Gov. Josh Shapiro said at an event for the announcement, according to Politico.
The Trump administration and the governors are also urging PJM to make a series of other changes, according to a Department of Energy fact sheet. Those changes include:
- Providing 15-year revenue certainty for new power plants;
- Capping the amount existing power plants can charge customers;
- Require data centers to pay for new power plants built on their behalf.
PJM operates in 13 states in the mid-Atlantic and parts of the Midwest. Representatives for the company were not present at the Friday event.
“We don’t have a lot to say on this,” PJM spokesman Jeffrey Shields told Bloomberg on Thursday. “We were not invited to the event they are apparently having tomorrow and we will not be there.”
In a statement on Friday, Shields did not immediately commit to the White House’s directives.
“PJM is reviewing the principles set forth by the White House and governors. The PJM Board’s decision, resulting from a multi-month stakeholder process on integrating large load additions, will be released later today,” Shields said. “The Board has been deliberating on this issue since the end of that stakeholder process. We will work with our stakeholders to assess how the White House directive aligns with the Board’s decision.”
Ari Peskoe, the director of the Electricity Law Initiative at the Harvard Law School Environmental and Energy Law Program, told Business Insider that it’s unclear whether the administration’s approach will work.
“The intent here is correct, which is to appreciate that data centers are driving up prices in PJM, and an attempt to remedy that for consumers,” Peskoe said. “It is meant to isolate data centers from the rest of the market, and, in theory, that seems like a workable approach; but these markets are really complicated, and it’s hard to predict how this all shakes out.”
Trump has been making a broader push for tech companies to pay for the electricity consumed by new data centers in a bid to lower energy costs for consumers.
“My Administration is working with major American Technology Companies to secure their commitment to the American People, and we will have much to announce in the coming weeks,” Trump wrote in a Truth Social post on Monday, adding that tech companies must “pay their own way.”
Microsoft on Tuesday released a plan that includes asking utility companies to set higher rates for the company in order to keep costs down for consumers. Other major tech companies could follow a similar path.
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