Credit: Severin Demchuk / Unsplash.com
President Donald Trump’s administration and a bipartisan coalition of governors, including Pennsylvania’s Gov. Josh Shapiro, joined forces last Friday to pressure the nation’s largest electrical grid operator into adopting reforms.
The pact was signed at the White House by U.S. Department of Interior Secretary Doug Burgum; U.S. Department of Energy Secretary Chris Wright; Shapiro, a Democrat; Maryland Gov. Wes Moore, a Democrat; Ohio Governor Mike DeWine, a Republican; and Virginia Gov. Glenn Youngkin, a Republican whose term ended Saturday. In total, 13 governors support the pact.
The document signed by the officials focuses on Montgomery County-based PJM Interconnection. The grid operator manages electricity for 67 million people across Pennsylvania, 12 other states, and Washington, D.C., a region that has seen prices skyrocket as data centers consume increasingly large shares of available power.
Under the “Statement of Principles,” the officials are calling for an emergency capacity auction that would allow tech companies to bid on 15-year contracts to build new power generation to power a growing number of energy-hungry data centers.
“We have to get out from underneath this bureaucratic system,” said Burgum. “One of the ways markets can work is to have the hyperscalers actually rapidly building power.”
The Trump appointee said, according to CNBC, that that increasing domestic energy is vital to winning the AI race against China.
A key portion of the agreement is the extension of a price cap originally negotiated by Shapiro.
Shapiro, who previously sued PJM to stop what he called unjustified price hikes, made his participation in the federal plan contingent on maintaining consumer protections.
If adopted, the extended cap is projected to save consumers across the PJM region approximately $27 billion over the next two years.
“For two years, I’ve been sounding the alarm,” Shapiro said. “In Pennsylvania, we’ve been focused on creating more energy, permitting faster, and protecting consumers.”
Shapiro threatened that Pennsylvania would “go it alone” and withdraw from the grid if PJM fails to implement reforms that would lower costs, per a report from Lancaster TV station WGAL.
The federal and state officials is calling on PJM to implement several changes to address what a Trump spokesperson called “energy subtraction failures” of the past.
Shapiro’s office laid out the main points of the Statement of Principles:
• Trigger a special “backstop” capacity auction offering generators up to 15-year commitments to accelerate the construction of new power plants
• Allocate the cost of those long-term contracts to data centers and new large users that have not brought their own power — instead of shifting those costs onto households and small businesses
• Significantly accelerate PJM’s interconnection process, including a firm 150-day deadline and expedited treatment for shovel-ready projects
• Launch a new PJM process to deliver long-term market reforms while extending Governor Shapiro’s negotiated price cap for the next two auctions
Wright, the federal energy secretary, partly attributed the price hikes to policies that forced the closure of older power plants.
PJM Interconnection was not present at the White House event, according to the Associated Press.
After the Washington D.C. signing, the PJM Board of Managers released a proposal to improve electric load forecasting and an increased role for states, ways for high-energy users to add their own generation or entering into a connect and manage framework, create a track for state-sponsored generation projects, start a backstop generation procurement process, and review the markets to see how PJM can support investment.
“This is not a yes/no to data centers. This is ‘How can we do this while keeping the lights on and recognizing the impact on consumers at the same time?’ We look forward to implementing, along with our stakeholders, these proposals to manage the phenomenal demand growth we are experiencing,” said David Mills, PJM board chair and interim president and CEO.
According to Monitoring Analytics, data center demand has already contributed to $23 billion in added costs within the PJM market.
A statement from the PennEnvironment Research and Policy Center noted that nearly all of the generation projects on PJM’s desk are renewable energy projects. In total, they could create enough power for 60 million homes.
“We have an abundance of clean energy projects being delayed by PJM that can power our lives with clean, reliable and affordable energy from the wind and sun. It is absurd that customers in PJM’s grid region are forced to pay higher and higher prices while PJM fails to connect those projects in a timely way,” said Carolena Bellini, PennEnvironment Research and PolicyCenter’s clean energy associate.
Shapiro, speaking to Bloomberg TV, said the governors are focused on bringing down electric costs and putting the burden of the increase in demand on the companies that need it.
“It’s good we’re working together to hold down costs for the American people,” Shapiro said.
The governor said he is proud Amazon is choosing the state to locate facilities, including one planned for Falls Township, but he acknowledged technology companies need to help “shoulder the cost burden.”
Shapiro’s office noted the governor’s administration is working on cutting permitting delays, speeding power interconnections, and working to position Pennsylvania, which is the nation’s second-largest energy producer and exporter, to build more generation facilities.
The move by the federal and state governments comes as rising electricity costs have become a political issue. In 2025, the impact of data center demand on utility bills was featured prominently in gubernatorial races in New Jersey and Virginia.
