Largest US Grid Has Two-Month Deadline for Overhaul Amid AI Boom
(Bloomberg) -- The largest US power grid has until the end of September to figure out how to cope with the AI-driven boom in power demand or face federally imposed reforms.
The Federal Energy Regulatory Commission plans to convene a September forum to finalize a package of solutions to overhaul governance at PJM Interconnection LLC, which serves 67 million Americans across 13 states and Washington, DC. If PJM leaders don’t act first, the regulator will force change, Chairwoman Laura Swett said Thursday.
“This commission is not going to hesitate to use the full extent of our legal authority to implement reforms necessary to restore confidence in PJM,” Swett said at the end of a day-long technical conference on grid governance. “PJM can be on a path toward success, hopefully without intervention.”
America’s aging electricity networks are struggling to keep up with surging demand from data centers, fueled by the boom in artificial intelligence. Among the country’s grid operators, PJM, which sprawls from Illinois to North Carolina, has endured the most criticism over its struggle to build sufficient electric generation and to keep utility bills in check.
During Thursday’s conference, federal officials weighed in, with Peter Lake of the National Energy Dominance Council saying the White House will not tolerate continued failure at PJM. Meanwhile, Deputy Energy Secretary James Danly characterized the grid as “a mess.” Both faulted PJM for a failure to deliver enough affordable power generation as well as opaque decision making.
“We don’t know who does what” at PJM, Danly said.
White House officials have grown increasingly frustrated with PJM, accusing it of slow-walking an emergency auction that would aim to get data centers to pay to cover a projected power supply shortfall in coming years. They’ve even suggested breaking the grid region into pieces. One of the biggest utilities in the US, American Electric Power Co., has threatened to leave the grid.
PJM officials said Thursday that the emergency mechanism, dubbed the reliability backstop procurement, would be put forward by early next week, which would enable an auction to take place starting in September.
While plenty of potential reforms were discussed Thursday, including giving states a greater say in decisions and streamlining procedures, it remains to be seen whether there is sufficient political will within PJM to enact them.
PJM is facing a “grave legitimacy crisis,” Swett said. “Frustrations are mounting.”
President Donald Trump has made AI a key pillar of his push to spur economic growth and maintain superpower status amid China’s rise. That goal requires enormous amounts of new electricity generation, as well as a rapid grid modernization.
“If we don’t change, there’s a 100% chance of failure,” said FERC Commissioner David LaCerte. “If we don’t get that action out of PJM, we will use every single legal authority within us, and maybe some more, to figure that out.”
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