Maryland's consumer advocate office is warning federal regulators that the PJM Interconnection LLC's $5 billion transmission expansion plan would saddle the state with unfair costs related to unprecedented datacenter growth in northern Virginia.
PJM, which oversees transmission planning for 13 mid-Atlantic states and the District of Columbia, filed its proposed cost allocation for the plan (ER24-843) with the Federal Energy Regulatory Commission in January.
The package of transmission solutions is intended to address up to 7.5 GW in new electricity demand from datacenters in Virginia and Maryland and the retirement of more than 11 GW of power generation capacity across the PJM footprint.
In a Feb. 9 protest, however, the Maryland Office of People's Counsel argued that PJM failed to properly account for a Virginia law that is expected to deliver approximately $3.6 billion in tax subsidies for datacenter development between 2022-2025. PJM anticipates electricity demand from datacenters in a zone that mostly covers Dominion Energy Inc. subsidiary Virginia Electric and Power Co.'s service territory to grow from approximately 3.5 GW in 2023 to more than 15 GW in 2028, the office noted.
Under PJM's proposal, Northern Virginia ratepayers would pay $2.5 billion while Maryland ratepayers would be charged approximately $551 million, or roughly 10% of the overall costs. The Maryland Office of People's Counsel said it is "deeply concerned" by a cost "misalignment," arguing that PJM failed to properly allocate costs for datacenter-related projects according to who will benefit from them.
PJM used a 2022 load-share ratio for the proposal, but that ratio will look significantly different by 2028, "when the transmission projects are anticipated to be completed and the new load has surfaced," the office said.
Ron Nelson, a senior director at the consulting firm Strategen, recommended an alternative approach in an attached affidavit.
Rather than allocating costs on a regional basis, Nelson argued that PJM should use 2028 load-share projections to identify grid solutions driven by datacenter growth in Virginia. FERC approved a multi-driver cost allocation methodology for PJM in 2015 that allows the grid operator to assign transmission costs in accordance with state public policies, Nelson noted.
"This approach is the most equitable as Virginia state policies lead to the transmission expansion need and the state receives most of the economic benefits of data center growth; therefore, the cost of the infrastructure needed to support its state economic development policy requirements and objectives should be directly allocated," Nelson said.
In its protest, the Maryland Office of People's Counsel noted that the state's ratepayers are already being asked to shoulder major transmission cost increases tied to the planned retirement of Talen Energy Corp.'s 1,273-MW coal-fired Brandon Shores power plant in June 2025. A $785 million package of related grid upgrades approved by FERC in November 2023 is expected to result in a 35% increase in Baltimore Gas and Electric Co.'s 2021 FERC-regulated transmission rate base, the office said.