MARYLAND — The Federal Energy Regulatory Commission issued an order on June 18, 2024, requiring six regional grid operators, including PJM Interconnection, to justify their methods of assigning transmission costs or propose changes. The order mandates improvements in the transparency of transmission costs, seeks to prevent cost shifting, and aims for clearer assignment of expenses related to grid upgrades tied to large energy loads such as data centers and manufacturing units.

The commission's order also requires grid operators to reevaluate how they connect customers, study customer connections, account for co-location, and plan transmission and generation service for energy-intensive facilities. PJM Interconnection, which operates the regional grid for Maryland, Washington, D.C., and parts of 12 other states, has billed Maryland for a share of costs associated with building new power lines for data centers located in neighboring Virginia.

On June 16, 80 Maryland lawmakers sent a letter to Federal Energy Regulatory Commission commissioners, pressing for immediate relief from $2 billion in billed costs from PJM Interconnection. The Maryland Office of People's Counsel also filed a complaint requesting a refund for costs assigned by PJM Interconnection. Maryland State Delegate Lorig Charkoudian stated, "Maryland is paying more than our fair share." David Lapp, the People's Counsel for Maryland, said, "The order shares the same intent as OPC's complaint—to protect ordinary customers from costs imposed by data centers." He added, "We believe the intent of the order, as well as the requirements of the Federal Power Act, require that PJM respond to the order by modifying its cost allocation methodology to ensure data centers pay their full freight." The Maryland lawmakers' letter stated, "The Commission must fix PJM's unfair cost allocation methods to meet the customer-protection commitments embodied in the White House and PJM governors' statement of principles and the Ratepayer Protection Pledge." They noted that "Maryland electric customers will pay $1.6 billion for just these projects over the next ten years, and much more over longer periods." Delegate Charkoudian also commented, "Data centers driving costs should pay for the costs they're driving up." Lapp concluded that the complaint proceeding offers a pathway for customers to receive relief, stating, "Our complaint proceeding is the only proceeding in which customers can get relief from the unfairness of those cost allocations that have already happened."

Why It Matters

The Federal Energy Regulatory Commission's order addresses concerns regarding how electricity transmission costs are allocated, especially as large energy consumers like data centers increase their demand on the grid. The action follows legislative and legal challenges from Maryland, which has been billed for infrastructure improvements benefiting facilities in other states within PJM Interconnection's operational area. This regulatory intervention aims to clarify cost responsibilities and prevent the shifting of these expenses to other ratepayers, such as those in Maryland.