Experts tell council data centers and demand growth are straining PJM and raising prices

Policy experts and the regional grid operator told City Council that a large part of the recent upward pressure on energy prices is tied to steep demand growth — most prominently from large data centers and increased electrification — and that current market structures and planning timelines are not keeping pace.

Jamie Van Ostrin, a senior fellow at Penn’s Climate Center, cited recent studies showing data centers already represent a growing share of U.S. electricity use and noted forecasts of continued steep load growth in the PJM footprint. "Data centers consumed about 4.4% of U.S. electricity in 2023, but are expected to consume approximately 6.7 to 12% of total U.S. electricity by 2028," he said.

Steven Bennett, senior manager at PJM Interconnection, described how large new data-center loads can appear quickly and asked for a policy and market response that accelerates new generation and transmission, improves forecasting, and requires new large loads to make binding commitments or bring their own capacity to avoid leaving other customers to absorb costs. PJM is considering reforms to forecasting, interconnection and capacity procurement to better align investment timelines with rapid load growth.

Advocates and lawmakers proposed immediate policy steps: state legislation (e.g., HB 1834) to prevent data-center costs from being shifted to residential customers, transmission and generation procurements that account for rapid load growth, and local rules to require community benefits when large data centers locate in or near the city.

Why it matters: Data-center siting and the capacity market are regional issues whose cost impacts fall on local ratepayers. Council members said the city will press for coordinated state–regional solutions so that residents are not forced to pay for private scale-ups in computing capacity.

Next steps: Council asked for technical briefings from PJM and state regulators and said it will monitor state bills regulating data centers and utility rate proposals.