Maryland's consumer protection agency is blocking a major power procurement plan that would force households to absorb hundreds of millions in costs for electricity demand that may never materialize.
The Office of People's Counsel filed formal objections with federal regulators challenging PJM Interconnection's long-term capacity purchasing strategy. The regional grid operator, which manages electricity across the Mid-Atlantic and parts of the Midwest, seeks to acquire power supplies based on forecasted demand. Much of that projected growth centers on data center construction, a sector with volatile expansion timelines and uncertain buildout schedules.
PJM's demand forecasting directly determines how much generation capacity utilities must contract for years in advance. Overestimating growth forces ratepayers to finance excess infrastructure that sits idle. The Office of People's Counsel argues PJM's projections are inflated, particularly regarding data center growth.
Data centers consume enormous amounts of electricity for computing power and cooling systems. A single large facility can demand as much power as a mid-sized city. Projections for data center expansion in the region have surged in recent years, driven partly by artificial intelligence infrastructure investments and cloud computing growth. However, these facilities frequently face construction delays, permitting obstacles, or project cancellations after initial announcements.
The Maryland consumer advocate operates on two regulatory tracks simultaneously. It challenged PJM's proposed capacity procurement directly before the Federal Energy Regulatory Commission, FERC, which oversees regional grid operators. The office simultaneously urged state regulators to impose additional oversight on how utilities within Maryland incorporate PJM's demand forecasts into their own planning and rate structures.
This dual approach reflects the complex split between federal and state jurisdiction over electricity markets. FERC sets rules for wholesale power markets and grid reliability, while state utility commissions control retail rates and utility planning. Maryland's approach targets both levels to limit ratepayer exposure.
PJM serves 65 million people across 13 states and Washington D.C. The grid operator manages capacity auctions where utilities bid to secure enough power generation for future years. Current capacity market rules rely heavily on load forecasting models that, critics argue, inadequately account for demand volatility in rapidly changing sectors like data centers.
The stakes extend beyond Maryland. Similar demand forecasting disputes are emerging across other regions as data center growth concentrates in specific geographic areas. Utilities in Virginia, Pennsylvania, and other PJM member states face comparable questions about whether they should prepay for generation capacity tied to speculative data center buildouts.
Overestimating demand by even 5 to 10 percent translates to billions in unnecessary capacity payments across a multi-state region over several years. Those costs flow directly to household electricity bills through rate structures designed to recover utility expenses.
The Office of People's Counsel's position reflects a broader tension in utility regulation. Grid operators need reasonable lead times to procure generation and maintain reliability. But consumers should not subsidize excessive capacity reserves built on outdated or speculative demand projections. As data center growth becomes increasingly concentrated geographically and temporally uncertain, this tension sharpens.
FERC decisions on similar challenges in other regions may influence the Maryland case. The commission has shown mixed receptivity to arguments challenging load forecasts, sometimes deferring to grid operators' technical expertise while other times demanding greater transparency in methodology.