Virginia leads multistate effort to prevent residents from bearing financial burden of power grid upgrades driven by data center expansion.
By James Whitfield | The Commonwealth Wire
RICHMOND — Governor Abigail Spanberger has joined governors from seven other states served by PJM Interconnection in pressing the regional grid operator to adopt policies protecting ratepayers from increased electricity costs driven largely by data center growth.
Staff members from the governors’ offices met with PJM representatives on March 27 to discuss policy changes that would prevent residential and business customers from shouldering the financial burden of power grid infrastructure upgrades needed to meet surging demand from data centers.
The multistate coalition includes governors from Delaware, Illinois, Maryland, New Jersey, North Carolina, Ohio, and Pennsylvania, all within PJM’s 13-state territory that stretches from Illinois to the mid-Atlantic coast.
Virginia has emerged as a national hub for data centers, particularly in Northern Virginia’s Loudoun and Prince William counties, where companies like Amazon Web Services, Microsoft, and Google operate massive facilities. These centers consume enormous amounts of electricity to power servers and cooling systems, driving up demand on the regional power grid.
PJM Interconnection operates the electric grid serving 65 million people across 13 states and the District of Columbia. The organization coordinates electricity generation, transmission, and distribution while managing wholesale electricity markets worth billions of dollars annually.
The governors’ push comes as PJM faces mounting pressure to modernize aging infrastructure while accommodating unprecedented electricity demand growth. Data centers typically require dedicated transmission lines and substations, costs that historically have been spread across all ratepayers in PJM’s territory.
“We need to ensure that families and businesses aren’t stuck with the bill for infrastructure that primarily benefits large tech companies,” Spanberger said in a statement following the March meeting.
The policy discussions center on who should pay for grid upgrades when new large-load customers connect to the system. Current PJM rules allow infrastructure costs to be socialized across all customers, but the governors are advocating for policies that would require data center operators to bear more direct responsibility for upgrade expenses.
Virginia’s data center industry generated $1.9 billion in state and local tax revenue in 2023, according to the Virginia Economic Development Partnership. However, the facilities’ massive power consumption has raised concerns about strain on the electric grid and potential rate increases for residential customers.
The meeting represents the latest effort by state leaders to balance economic development benefits from data center growth with protection for ordinary ratepayers. PJM has not announced specific policy changes resulting from the governors’ request.
Additional discussions between state officials and PJM leadership are expected in coming months as the organization reviews its cost allocation policies. Any changes would require approval from federal regulators at the Federal Energy Regulatory Commission.
Key Facts
- Governor Spanberger joined seven other state governors in pushing PJM Interconnection to protect ratepayers from data center-driven electricity cost increases
- Staff from eight governors’ offices met with PJM representatives on March 27 to discuss policy changes
- Virginia’s data center industry, concentrated in Northern Virginia, generated $1.9 billion in state and local tax revenue in 2023
- PJM operates the electric grid serving 65 million people across 13 states and Washington D.C.
- Current PJM rules allow infrastructure upgrade costs to be spread across all customers, which governors want changed
