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AI data centers drive up PJM power supply costs as auction misses target
PJM’s auction to secure power for the June 2028 delivery year failed again, falling 6.8 gigawatts short of reliability needs and leaving the grid operating with slimmer reserves.
Power costs for the largest US electric grid rose sharply as demand from data centers surged, according to Insurance Journal. PJM Interconnection LLC, which serves 13 states and Washington, DC, said its auction to procure power for the year starting June 2028 was tied to a $16.4 billion record set in late 2025, with data centers accounting for about $6.3 billion of that total.
Monitoring Analytics, the grid’s independent market monitor, said the supply-cost increase for PJM tied to data-center load is more than 60% and that the impact on PJM ratepayers totals almost $30 billion when figures from three earlier auctions are included. The auction also failed for a third straight time to secure enough future supply commitments to maintain reliability.
The shortfall was 6.8 gigawatts versus what PJM needs to guarantee system reliability during demand spikes, which Monitoring Analytics said is equivalent to almost seven traditional nuclear reactors. PJM said the reliability target failure is “not an acceptable way to go forward,” and that consumers were effectively being asked to cover extra costs.
PJM’s results showed the daily cost of auction payouts hit the $325 per megawatt-day price cap, a level that will show up in users’ monthly utility bills. The grid operator said that while the shortage does not necessarily mean it cannot serve load reliably, it would have to run with slimmer reserves and higher risk, and it is looking toward an emergency procurement mechanism later this year aimed at shifting ramping responsibilities to hyperscalers.