Data Centers Hit the Power Bill

$29.4 billion. That is what data-center demand added to capacity charges across PJM's last four base auctions, which is 46% of the $63.6 billion consumers paid in that period, market monitor Joseph Bowring told Utility Dive. The number has stopped being a forecast. It is already on the bill.

PJM Interconnection serves over 67 million residents across 13 states, and its next capacity auction arrives next month. It will secure resources for the year starting June 2029. Bowring's firm, Monitoring Analytics, warned in a Thursday report that capacity needs tied to planned data centers would add $5 billion to $10 billion for the delivery year beginning June 2029, according to a Briefs summary of the report. The monitor expects the auction to clear at the price cap, a view that independent power producers echoed on earnings calls this past week, Briefs said.

How the bill got built

The last auction shows the mechanism. PJM's 2028-2029 auction hit a $325/MW-day cap across the region, and the grid operator said it left the system roughly 6.8 GW short of its 20% reserve-margin target. The auction drew only about 525 MW of new resources, and 208 MW of that was uprates to existing plants. Without the price collar, PJM said, the bill would have been $29.7 billion rather than $16.4 billion.

Bowring said in July that data centers accounted for $6.3 billion, or 38%, of that $16.4 billion. Stu Bresler, PJM's chief operating officer, attributed the result partly to a roughly 2 GW rise in forecast demand, largely from data-center development.

Capacity is only one line. Through July, existing and forecast data-center load made up 9%, or $10.48/MWh, of PJM's wholesale power price, the monitor said at an Aug. 24, 2026 meeting. That figure came through the capacity market alone and excludes any data-center effect on energy or transmission prices. PJM's total wholesale cost over the first seven months of 2026 rose 46% to $116.53/MWh, or $56.7 billion, from $79.57/MWh, or $38 billion, a year earlier.

The monitor also argues the forecast is padded. Its demand outlook includes data-center projects that have been delayed or canceled, Briefs reported, which Monitoring Analytics says tightens the coming auction more than necessary. It wants the annual auction postponed until PJM can run a special procurement aimed at data centers.

In the Briefs summary, PJM's Jeffrey Shields said the grid operator "fundamentally disagrees" with the claim that it can rein in these costs, arguing that states and their utilities control the facilities. He added that PJM has proposed ways for states to assign large-load costs back to the customers causing them. Bowring is unconvinced. On March 4, Google, Meta, Microsoft and other operators pledged at the White House to shield consumers from data-center price hikes. Meeting that pledge is impossible in PJM under current rules, Bowring said. "PJM is continuing to act like it's business as usual." he said in an interview.

Texas asks first

ERCOT is moving the other way. CEO Pablo Vegas will ask the Texas legislature for authority to make data centers cut power before an emergency is declared, Bloomberg reported in a story relayed by Insurance Journal. Today, Texas must reach level two of a three-level alarm before it can request reductions. Vegas wants them required at level one, or earlier.

Senate Bill 6, passed in 2025, already lets Texas require large loads to curtail on 24 hours' notice. ERCOT has not yet used it, though Vegas said facilities cut demand voluntarily during extreme weather last winter. At the BloombergNEF Summit in Houston, he said: "We really don't want to impact residential and everyday businesses if we get into a scarcity event in the state." He also said: "The hyperscalers are on board with integrating into the system and into the community"

Microsoft was in the same Houston room. Noelle Walsh, its president of cloud operations and innovation, said: "We don't want other customers to be paying for our growth." She added: "We will pay our own way." The company plans to build $117 billion of computing capacity this year, Bloomberg reported, so the pledge covers a lot of ground. It also faces a political test. Microsoft is working with Chevron and Engine No. 1 on a behind-the-meter data and power project in West Texas that Governor Greg Abbott's moratorium on new data-center approvals has held up. Abbott lost this month to Democrat Gina Hinojosa, who has pledged a potentially tougher permitting stance. Chevron still targets start-up by 2028 and full operation by 2031 for Project Kilby. Jeff Gustavson, its president of new energies, said a project that fails to benefit its community is "doomed to fail."

Gas fills the wait

When grids cannot connect load quickly, developers bring their own power. BloombergNEF has tracked 181GW of gas-fired generation proposed alongside data centers, with more than 90% of it in the US. The firm cautions that the pipeline varies widely in maturity and should be read as an indication of potential scale, not a forecast.

If every announced US on-site gas plant were built and run on BNEF's assumptions, the plants would emit about 345 million metric tons of CO2-equivalent a year. That is 152MtCO2e more than supplying the same capacity from average US grid power, which BNEF equates to 10% of 2025 US power-sector emissions. Once the stopgap plants are running, BNEF says, the economics could keep them generating, a fossil-fuel lock-in risk.

BNEF expects data-center electricity demand to almost quadruple to 2,354 terawatt-hours by 2035, equal to 7% of global consumption. "The climate outcome will depend not only on how much electricity these facilities use, but on how quickly grids can connect them," said Mark Daly, BNEF's head of data centers and emerging tech.

Microsoft says it will pay its own way. In PJM, the meter is still running on everyone else.