The Trump administration announced a serious intervention into the nation's largest electricity market on Friday, joining a bipartisan coalition of governors in pressing grid operator PJM Interconnection to force technology companies to pay for new power plants needed to serve their data centers.

The initiative, unveiled at a White House event attended by Energy Secretary Chris Wright and Interior Secretary Doug Burgum, calls for PJM to hold an emergency capacity auction that would compel data center developers to fund approximately $15 billion in new power generation. The plan would require tech companies to pay for that power over 15-year contracts whether they use the electricity or not, according to the Department of Energy.

PJM Interconnection serves more than 67 million people across 13 states and Washington, D.C., and its territory includes northern Virginia, which hosts the largest concentration of data centers in the world. The grid operator was not invited to participate in Friday's announcement, a PJM spokesperson told Reuters.

Capacity Shortfalls and Record Prices

The intervention comes as PJM faces mounting pressure over electricity prices that have exploded in recent years. A recent capacity market auction set record-high prices for power generators that were more than 800 percent higher than the previous year, according to Reuters. Those costs are ultimately passed down to consumers through their utility bills.

According to watchdog Monitoring Analytics, approximately $23 billion in capacity costs are attributable to data centers. The watchdog described this as a "massive wealth transfer" in a November letter to PJM. The grid operator's most recent auction fell 6.6 gigawatts short of its reliability requirement for 2027, equivalent to roughly six large nuclear plants, which PJM attributed to the surge in data center construction.

Residential electricity prices have climbed sharply across the country despite Trump's campaign promises to lower energy costs. The average U.S. retail price for electricity gained 7.4 percent in September to a record 18.07 cents per kilowatt-hour, according to ZeroHedge. Residential prices specifically jumped 10.5 percent between January and August 2025, marking one of the largest increases in more than a decade.

Framework Details and Price Protections

The administration's framework centers on a concept known as "bring your own generation," or BYOG, which would require data centers to either pay for new power plants built on their behalf or prove they have self-procured capacity or agreed to be curtailable. The White House is also seeking to extend an existing price cap on what current power plants can charge in PJM's capacity market for two additional auctions to protect ratepayers.

"We have to get out from underneath this bureaucratic system that we have in the regional grid operators and we've got to allow markets to work," Interior Secretary Burgum said at the White House event, according to CNBC. "One of the ways markets can work is to have the hyperscalers actually rapidly building power."

The proposal would guarantee 15 years of revenue certainty for new "reliable baseload" power plants, a significant departure from PJM's traditional 12-month auction periods. The administration is urging PJM to hold the emergency auction by the end of September.

Governors Apply Bipartisan Pressure

Pennsylvania Governor Josh Shapiro, a Democrat who has been a vocal critic of PJM's management, joined Republican Governors Glenn Youngkin of Virginia and Mike DeWine of Ohio, along with Maryland's Democratic Governor Wes Moore, at the White House signing of the "Statement of Principles."

Shapiro threatened to withdraw Pennsylvania from PJM if the grid operator does not implement the proposed reforms. "Make no mistake if PJM, this sort of faceless bureaucratic organization that is driving prices up on the American people, does not change and does not reflect what we are putting forth here today, Pennsylvania will be forced to act and forced to go it alone," Shapiro said, according to CNBC.

The Democratic governors' participation lends bipartisan credibility to the effort, though Moore drew a contrast with Trump's broader energy policies. "We do need to have an all-the-above energy strategy, one that does focus on increasing aspects of solar and wind and nuclear," Moore said at the event, according to Politico.

If implemented, Shapiro said the extended price cap could save the 67 million customers in PJM's territory approximately $27 billion over the next two years.

Implementation Challenges and Industry Skepticism

Market analysts and industry experts expressed skepticism that the plan would deliver near-term relief, given the time required to build new generation capacity. Rob Gramlich, president of consultancy Grid Strategies, told Canary Media that it remains unclear how the proposal could be implemented quickly enough to make a difference.

"It's not at all clear how this can actually get implemented," Gramlich said. "How would this ever get implemented — and would this require changes that usually take five years?"

Julia Hoos, head of USA East at Aurora Energy Research, acknowledged that PJM has struggled to bring new generation online fast enough but called the White House intervention "unprecedented." She warned that the approach could harm PJM's reliability by squeezing revenues from existing generation.

"This type of 'out of market' action can quickly add new generation, but may be financially disastrous for existing generation, which ultimately hurts reliability in the entire region," Hoos wrote in a Friday note, according to Politico.

PJM said it is reviewing the principles set forth by the White House and governors. The grid operator released its own 12-proposal plan on Friday to address data center integration, which it said includes immediate changes as well as filings with the Federal Energy Regulatory Commission. The company indicated it will seek additional stakeholder feedback before deciding whether to extend the price cap provisions that governors are demanding.