On behalf of the Maryland Office of People’s Counsel (OPC), the direct testimony assesses whether PJM’s method of allocating transmission costs approved under the Regional Transmission Expansion Plan (RTEP) process remains just and reasonable with the advent of large data center loads and the unprecedented impact they have had, and will continue to have, on 18 the transmission system operated by PJM.
The testimony analyses PJM’s cost allocation methods and shows that ratepayers will pay an additional $1.6 billion on their electric bills in transmission costs over the next 10-years based on projected needs approved by PJM through 2025. These costs are driven almost entirely by explosive data center growth occurring outside of Maryland. Maryland ratepayers, who neither caused nor benefited from these transmission investments, will be affected.
The recommendations outlined in this testimony ask the Federal Energy Regulatory Commission (FERC) to reject PJM’s tariff as unjust and unreasonable and to develop an alternative replacement rate and method that fairly allocates transmission network upgrade costs to the data centers driving the increased need. The proposed modifications to PJM’s existing cost allocation methodology would establish meaningful protections for average ratepayers and provide necessary transparency to PJM states, like Maryland, and other PJM stakeholders about which costs are actually driven by data center growth, so they can be allocated accordingly.
Key Takeaways
- Using CEG’s analysis, Maryland ratepayers will pay an additional $1.6 billion in transmission costs over the next ten years from transmission upgrades that are largely driven by data center growth, including $823 million from residential customers (approximately $345 per average customer), $146 million from commercial customers ($673 per average customer), and $629 million from industrial customers ($15,074 per average customer). Most of these costs ($1.2 billion) are passed through to BGE and Pepco customers. Large load customers are not currently directly assigned transmission network upgrade costs. Most, if not all, transmission network upgrades costs are socialized to existing customers.
- Maryland ratepayers will pay for transmission upgrades largely due to data centers outside the state. Due to Maryland’s proximity to the data center cluster in northern Virginia, Maryland utilities receive significant cost allocations using PJM’s existing methodology of hybrid load-ratio share and solution-based distribution factor (DFAX) allocations.
- Data centers account for approximately 94% of projected PJM load growth. PJM projects 32 GW of peak load growth systemwide by 2030, of which approximately 30 GW is attributable to data centers. PJM has included nebulous projections of large-load growth in its resource planning, resulting in PJM building transmission for speculative projects and socializing the associated costs to all ratepayers.
- The Maryland OPC is asking FERC to establish a refund effective date, direct PJM to re-study project windows to determine the proportion of transmission system impacts caused by data center load growth, and to credit back these costs that were inappropriately allocated to transmission zones outside of where the data center growth is occurring.
- The complaint asks FERC to direct PJM to develop an interim relief solution that reflects a methodology that allocates transmission costs associated with large load interconnections to the zones where those large loads exist or are projected to develop; and a longer-term solution that establishes a more robust standard large load interconnection process that requires interconnecting large load customers to fund 100 percent of the network upgrade costs they cause, with appropriate crediting mechanisms based on their future use of the system.
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