The White House and several governors of Mid-Atlantic states on Friday launched a dramatic and unprecedented intervention into PJM, urging the grid operator to hold an emergency electricity auction that requires data center hyperscalers to pay for new power plants.
The measure urges a one-time auction outside of PJM’s regular timeline or rules as a way to curb rising electricity prices and a looming power crunch, largely due to skyrocketing demand from data centers. Even though PJM’s last capacity auction cleared at record-high prices, for the first time in the grid operator’s history it failed to line up enough new power generation to meet reliability targets for June 2027 and beyond.
“Ensuring the American people have reliable and affordable electricity is one of President Donald Trump’s top priorities, and this would deliver much-needed, long-term relief to the Mid-Atlantic region,” White House spokesperson Taylor Rogers said in response to questions from Latitude Media, adding that the directive is aimed at preventing price increases and reducing the risk of grid blackouts.
The Energy Department said PJM should require that tech giants pay for new generation built for data centers — regardless of whether they show up — and sign 15-year contracts to give investors more confidence to spend some $15 billion on new power plants. DOE also told PJM to maintain price caps in the emergency auction, which have been in effect since early 2025 under a deal the grid operator struck with Pennsylvania Gov. Josh Shapiro.
The plan is part of Trump’s push to ensure tech companies’ AI data centers don’t drive up electricity costs for regular customers, especially with affordability being a top concern of voters. Microsoft was a first mover among tech companies, announcing a plan on Tuesday to pay higher tariff rates for power under agreements with utilities and state PUCs.
The administration’s directive to PJM is a necessary but complex next step, several analysts told Latitude Media.
“We hope this helps avoid colocation, where data centers try to buy up existing capacity, which creates a shortfall for everyone else. That would be a disaster for the market,” said Joseph Bowring, president of Monitoring Analytics, the Independent Market Monitor for PJM. “Nobody knows how much load data centers will add. So one of the advantages of this bring your own new generation approach is it says to the data centers, ‘If you’re real, prove it.’”
Still, there are few details about how the auction might work, and PJM officials were not involved in a White House event announcing the agreement, Bloomberg reported. PJM in a statement said its board was reviewing principles released by the administration. The White House and governors are pushing PJM to hold a special auction by June.
PJM’s crowded agenda
There is no precedent for this type of “out-of-market” capacity auction, said Julia Hoos, head of USA East at Aurora Energy Research. Some energy experts noted that it would need to be approved by the Federal Energy Regulatory Commission.
A new auction could also complicate several parallel processes PJM has underway to address grid bottlenecks, including: an overhaul of its interconnection process, which has paused new applications since 2022; creating more certainty in load forecasts in capacity auctions; and clarifying how to implement co-location and flexibility for data centers.
“I’m not sure the White House has fully taken into consideration everything else that PJM is trying to figure out,” Hoos told Latitude Media. “PJM is incredibly conservative in their planning, because their job is to keep the lights on. They understandably want to study all of the possible impacts before moving forward. The tension is that the tech industry isn’t used to being told to slow down and consider all the possible risks.”
Heather O’Neill, President and CEO of Advanced Energy United — a trade group representing both clean energy and tech companies — said a one-time auction won’t solve the many factors driving up energy costs. That’s why it’s still urgent that PJM speed up its interconnection queue and the construction of long-haul transmission lines, among other changes.
The clean energy question
She also indicated that clean energy developers are concerned they won’t be able to participate in the auction. The Trump administration has tried to block the construction of offshore wind projects, even as developers including Dominion have said they are needed to serve power demand from data centers.
Energy Secretary Chris Wright on Friday blamed the closure of coal and natural gas plants for PJM’s woes, while Interior Secretary Doug Burgum said “the Green New Scam” has left families with skyrocketing bills.
However, several studies have found that PJM’s interconnection queue is largely dominated by solar, battery storage, and offshore wind projects that — had they come online quickly — would reduce electricity costs. A 2025 analysis by Grid Strategies found electricity costs could have been reduced by as much as $7 billion dollars in a recent PJM capacity auction, had its interconnection process been more efficient.
“It’s yet to be seen if the proposal would create a fair and competitive market-based solution that adequately protects customers, and it leaves unaddressed many of the underlying factors driving up energy costs,” O’Neill said in a statement. “Advanced energy companies will be first in line to meet data center demand if this proposal is implemented in a way that’s fair and competitive.” Rob Gramlich, president of Grid Strategies, said in an email that offshore wind and batteries have the same “capacity value” as gas plants, so the market should include all resources with the credit they deserve.
