Trump, Mid‑Atlantic Governors Push Long‑Term Tech Fees for New Power Plants
The proposal from former President Donald Trump and a coalition of Mid‑Atlantic governors is turning heads in the energy sector. By tying technology firms directly to the financing of future power plants, officials hope to lock in a steady stream of cash for projects that have long struggled to attract private investment. Advocates argue that the approach could smooth the path for new generation capacity at a time when regional grids are feeling the pressure of soaring electricity consumption.
Critics, however, warn that attaching such fees to tech companies may shift costs in unpredictable ways and could influence where data centers choose to locate. With demand for high‑density computing facilities climbing, the stakes for grid operators are rising fast. The unusually long length of the contracts would ostensibly make it easier to build out new infrastructure by guaranteeing revenue and discouraging speculative requests to connect to the grid by data center developers.
The move comes as power grids scramble to meet increasing electricity demand from—
The unusually long length of the contracts would ostensibly make it easier to build out new infrastructure by guaranteeing revenue and discouraging speculative requests to connect to the grid by data center developers. The move comes as power grids scramble to meet increasing electricity demand from AI, while lawmakers and tech companies building out new data centers face growing fury from Americans over rising electricity rates. Lawmakers and tech companies building out new data centers face growing fury from Americans over rising electricity rates PJM operates the largest electricity grid in the US, which spans 13 states across the Midwest and Atlantic and includes the concentration of data centers in Virginia.
The governors of all states, including Democrats Josh Shapiro (D-PA) and Wes Moore (D-MD) signed onto the statement issued today with Secretary of Interior Doug Burgum and Secretary of Energy Chris Wright. CNN notes, however, that neither the White House nor governors can mandate the auction. And Bloomberg reports that PJM wasn't invited to the announcement made today.
The Department of Energy (DOE) says data centers should "pay more for new generation than residential customers." Specifically, it calls on PJM to allocate costs for new infrastructure to data centers unless they bring their own power plants online or agree to curtail their energy use during supply crunches. The auction could lead to $15 billion in new power generation, according to the DOE.
Will the push succeed? The administration and governors are pressing PJM for an emergency auction that would lock in long‑term contracts for new generators. Their aim: shift the cost of building capacity onto data‑center developers and other tech firms.
By guaranteeing revenue, the proposal hopes to smooth financing and curb speculative grid‑connection requests. Yet the plan hinges on whether those firms will actually sign up. PJM has never run an auction of this scope, and its rules would need to accommodate unusually lengthy contracts.
Critics argue that forcing private players to shoulder infrastructure costs could distort market signals. Supporters contend that grids are already scrambling to keep pace with rising electricity demand. The outcome remains unclear; the proposal could reshape how capacity is funded, or it could stall amid regulatory and industry pushback.
Until PJM issues a formal schedule, the effectiveness of the “emergency” auction is uncertain. Stakeholders are watching closely for any formal response from the market operator.
Further Reading
- Trump, governors push tech companies to pay for rising power costs - Axios
- Trump administration pushes PJM to hold 'emergency' auction to ... - Utility Dive
- FACT SHEET: Trump Administration Outlines Plan To Build Big ... - U.S. Department of Energy
- Trump Administration Calls for Emergency Power Auction to Build ... - U.S. Department of Energy
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Common Questions Answered
What is the main purpose of the long‑term tech fees proposed by Trump and Mid‑Atlantic governors?
The fees are intended to tie technology firms directly to financing new power plants, guaranteeing revenue for generators and reducing speculative grid‑connection requests from data‑center developers. By doing so, officials hope to secure steady cash flow for projects that have struggled to attract private investment.
How would the proposed emergency auction by PJM affect data‑center developers?
The emergency auction would lock in long‑term contracts for new generators, shifting the cost of building capacity onto data‑center developers and other tech firms. This arrangement aims to smooth financing and discourage speculative requests to connect to the grid, potentially lowering electricity rate pressures on consumers.
Why are regional grids under pressure from AI‑driven electricity demand, according to the article?
Increasing AI workloads are driving rapid growth in electricity consumption, especially from data centers that support AI training and inference. This surge strains existing grid capacity, prompting lawmakers to seek mechanisms like long‑term contracts to ensure new generation can meet the rising demand.
What challenges could PJM face in implementing the unprecedented auction described in the proposal?
PJM has never conducted an auction of this scope, so its existing rules would need to be revised to accommodate long‑term contracts tied to tech fees. Additionally, the plan's success depends on whether technology firms actually sign up for the financing commitments.