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Maryland citizens slapped with $2 billion power grid upgrade bill for out-of-state AI data centers — state complains to federal energy regulators, says additional cost breaks ‘ratepayer protection pledge’ promises
Aren't AI hyperscalers supposed to pay for these upgrades?
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The Maryland Office of People’s Counsel (OPC), a state agency that represents its utility consumers, filed a complaint before the Federal Energy Regulatory Commission (FERC) regarding PJM Interconnection, LLC’s plans to charge it $2 billion of the $22 billion it spent to upgrade its grid to accommodate increasing demand from data centers. According to the OPC’s press release, this $2 billion bill will cost the state’s consumers an extra $1.6 billion in the next ten years alone — that means an extra $823 million for residential (approx. $345 per customer), $146 million for commercial (approx. $673 per customer), and $629 million for industrial customers (approx. $15,074 per customer).
“Without FERC action, Maryland customers face paying billions for transmission infrastructure that PJM is advancing to benefit data centers,” said Maryland People’s Counsel David S. Lapp. “PJM’s cost allocation rules are broken. Maryland customers have neither caused the need for these billions in new transmission projects nor will they meaningfully benefit from them.”
PJM Interconnection, LLC is the United States’ largest electricity transmission company, and covers 13 states plus Washington, D.C. This includes Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, and West Virginia, covering about 65 million people, or about 20% of the entire U.S. population. Some of these states, including Maryland, host a large number of data centers, so the firm needs to upgrade its infrastructure to meet projected demand from these power-hungry AI systems.
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However, the state argues that PJM’s methodology for allocating costs places an unfair burden on Maryland ratepayers. The OPC argues that the forecasted growth for the state is nowhere near the figures for other states, including Virginia, Ohio, Pennsylvania, and Illinois, which play host to many more data center projects. If the electricity transmission firm keeps its current computation, it would mean that Maryland customers are subsidizing the upgrade costs for projects that do not directly benefit the state.
Maryland says that these infrastructure costs should be charged directly to the areas where they’re being constructed, or, as President Donald Trump made tech companies promise with the "ratepayer protection pledge," the companies themselves should be billed directly for these grid upgrades. The OPC said there is “extreme uncertainty” regarding load growth driven by data center demand, and that utility providers tend to benefit from these upgrades even if the demand never materializes. This is especially true because the costs of these investments are borne by existing utility customers, not by the data centers themselves, if the data centers do not follow the “ratepayer protection pledge.”
This is one of the biggest reasons why many AI hyperscalers are facing pushback from the communities where they intend to place their data centers. At the moment, around 69 jurisdictions have passed some sort of moratorium on projects like these, and a survey has shown that nearly half of Americans do not want a data center in their neighborhood. Debates around these projects are passionate, with a few cases turning violent and even resulting in shootings (thankfully, without any casualties), especially as many feel that the construction of these power-hungry assets is threatening their lifestyles and quality of life.
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Contact me with news and offers from other Future brandsReceive email from us on behalf of our trusted partners or sponsorsBy submitting your information you agree to the Terms & Conditions and Privacy Policy and are aged 16 or over. TOPICS Data Center See all comments (7) Social Links NavigationContributing WriterJowi Morales is a tech enthusiast with years of experience working in the industry. He’s been writing with several tech publications since 2021, where he’s been interested in tech hardware and consumer electronics.
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