Trump, Governors Pitch Unprecedented Step To Stem Data Center-Driven Price Hikes

In an effort to counter the soaring electricity costs linked to artificial intelligence-fueled data center development, the White House and a bipartisan group of governors are pressuring the largest U.S. grid operator to take a historic step — one that would make tech giants pay for new power plant construction. 

Electricity prices are skyrocketing within the service territory of PJM Interconnection, a power transmission system spanning 13 states in the mid-Atlantic and Midwest that serves more than 65 million people. Data centers have been connecting to the PJM grid faster than new power generation needed to supply them, driving a supply-and-demand imbalance poised to increase households' utility bills by nearly $70 within two years. 

Now, President Donald Trump and governors of states served by PJM are backing a plan that directs the grid operator to hold an unprecedented emergency power auction, Bloomberg reports.

The proposed auction is designed to sell new electricity generation capacity through 15-year contracts, which tech firms would bid on. Crucially, companies like Amazon, Microsoft, Google and Meta — the major drivers of the data center building boom — would be required to pay for their entire contracted power allotment over the full 15-year term, regardless of whether they actually use that electricity to power their data centers.

The auction and resulting contracts are intended to establish guaranteed revenue streams needed to finance the development of new power plants.

White House officials claim the auction, which they hope will be held by the end of September, would secure the capital to build $15B in new power generation, according to Bloomberg. 

The White House announced the effort at an event on Friday, unveiling a nonbinding "statement of principles" signed by Trump's National Energy Dominance Council and the governors of several PJM states. The coalition has both Republicans and Democrats, including Pennsylvania Gov. Josh Shapiro and Maryland Gov. Wes Moore.

“Ensuring the American people have reliable and affordable electricity is one of President Trump’s top priorities, and this would deliver much-needed, long-term relief to the mid-Atlantic region," White House spokesperson Taylor Rogers said, according to ABC News.

PJM — one of several regional transmission organizations in the U.S. — oversees a service territory in which many utilities provide electricity to households and businesses. It operates the market for utilities to buy power, controls the process for adding power plants, and makes sure the grid stays reliable. 

The ballooning pipeline of new projects in fast-growing markets such as Virginia and Pennsylvania — combined with few new power plants being added to the grid — has exacerbated the PJM system’s already acute affordability crisis. 

PJM’s capacity power prices are projected to rise more than 1,000% from 2024. Under the current system, PJM customers are expected to pay an additional $100B through 2033.

In response, PJM has undertaken its own efforts to reform how new power generation is added to its system, but these initiatives have stagnated amid competing proposals and priorities from a vast ecosystem of stakeholders. 

While Friday's White House event centered on PJM's grid, PJM itself wasn't invited.

“We don’t have a lot to say on this,” PJM spokesperson Jeffrey Shields told Bloomberg. “We were not invited to the event they are apparently having tomorrow and we will not be there.”

White House officials say the aim is for the auction to be a one-time event to address what they portray as an emerging affordability emergency, rather than a major reform to PJM’s normal operations.

Many of the parties involved in ongoing attempts to implement reforms at PJM to limit cost increases reacted positively to the plan. Monitoring Analytics, PJM’s independent watchdog, called it a “significant improvement.”

This sentiment was echoed by Claire Lang-Ree, an advocate for the Sustainable FERC Project at the Natural Resources Defense Council. 

“This announcement represents rare bipartisanship — governors from PJM states have united to protect the 67 million Americans in PJM from skyrocketing energy bills and the risk of blackouts due to the rapid pace of new data centers and fossil fuel un-reliability,” Lang-Ree told Bisnow in an email. 

Still, Lang-Ree said the proposed auction itself will not be enough without structural changes to PJM, such as requiring data centers to add their own power generation to the grid and ensuring generation for data centers isn’t prioritized over generation that could lower prices for consumers. 

“Everyday people can’t afford to pay the price and bear the risks of data center growth, and we need solutions that will actually deliver on that promise,” she said. 

The Trump administration’s proposal comes weeks after a group of Democratic senators launched an investigation into the impact of data centers on consumers’ electricity bills.

Democratic legislators are increasingly targeting data centers and rising power prices as a priority issue to engage voters ahead of midterm elections in which control of the House and Senate is at stake. These efforts have sought to draw a contrast with a White House that has aggressively promoted the development of data centers and associated energy infrastructure as part of its AI strategy.

Earlier this week, Trump praised a new plan from Microsoft to pay for its own data center power and avoid consumer cost hikes, saying it would be one of several Big Tech companies to pursue such initiatives.