Myth vs. Fact

PJM Interconnection operates the electric grid that serves 67 million people across 13 states and the District of Columbia. We keep electricity flowing reliably every day and plan for the grid’s future needs.

PJM is an independent, federally regulated operator that:

• • Does not generate electricity
  • Does not set utility rates
  • Does not make profits

PJM conducts auctions to buy power today and in the future to keep power flowing at all times; these wholesale supply costs represent a portion of your retail bill. PJM acquires enough electricity generation to meet demand on the hottest and coldest days of the year, when demand for power is highest.

With so much discussion about electricity prices, reliability, data centers and energy policy, it can be difficult to separate fact from fiction. Here are some of the most common myths about PJM and the electric grid, along with the facts behind them.

Let’s take a look at more answers to common misconceptions.

FACT: PJM does not set retail electricity bills. State regulators and utility commissions determine the rates customers pay, and different states have different ways of setting utility rates and protecting consumers from market volatility.

PJM’s role is to run auctions to procure power. Those wholesale costs get passed through state regulators and utilities into retail costs. State regulators take wholesale costs and determine how they are allocated among types of customers, i.e., commercial vs. residential.

FACT: The wholesale price of electricity reflects simple supply and demand. Your retail electricity prices are influenced by many factors, including fuel costs, state energy policies, demand growth, power plant retirements, transmission investments, weather, and the balance between electricity supply and demand. While we currently have enough electricity-generating resources to meet demand, we are experiencing substantial demand growth being driven by data centers and the artificial intelligence race. That’s what’s causing higher wholesale prices.

FACT: PJM favors no specific generation resource over another. In fact, the PJM grid benefits from its diverse resource mix.

Any project that meets PJM’s requirements can seek to connect to the grid, regardless of the energy source.

PJM has processed over 320 GW worth of proposed generation projects since 2020, producing over 100 GW of project agreements. PJM now has over 50 GW in projects that have agreements and should be ready to build; the vast majority of those projects are solar, wind and storage.

To meet the recent, urgent need for new generation to meet the rapid growth in electricity demand driven by data centers, PJM has opened its approval process to new, high-reliability generation projects that are not chosen by fuel type or technology but for their ability to provide reliable power and get built in a relatively short time frame.

FACT: PJM is clearing projects to connect with the grid faster than ever. PJM has successfully reformed its interconnection process to eliminate any backlogs in projects waiting to connect with the queue. Our one- to two-year process is on par with the industry, but PJM is working on multiple fronts to further reduce this timeline given the fast-paced growth of electricity demand and the need for new sources of power.

In April, PJM Interconnection announced that 811 new generation projects, capable of generating 220 GW of electricity, have applied to connect to the grid through the first cycle of PJM’s reformed interconnection process. The applications include a diverse mix of generation resources: 811 total projects, led by storage (349), natural gas (157), solar (142), wind (65), solar-storage hybrids (45), nuclear (27), other (15) and hydro (11).

At the same time, many new generation projects have been slow to come online, largely driven by permitting timelines, financing and supply chain availability. PJM is working with stakeholders at the state and federal level to remove obstacles beyond PJM’s process so generation can be built.

FACT: PJM is an independent, federally regulated entity that operates as a nonprofit. Our purpose is to keep the lights on for 67 million people, using the competition of free markets to keep costs competitive. We have more than 1,000 members, including local utilities, generation owners, state consumer advocates, commercial and industrial users, and others. We do not own power plants, generate electricity or deliver electricity directly to homes or businesses.

Our role is to operate the grid fairly and reliably, balancing varied interests while administering competitive wholesale energy markets.

FACT: PJM is taking swift and decisive action to try and balance: (i) our obligation to maintain grid reliability; (ii) the desire of policymakers to connect data centers to the grid; and (iii) affordability for consumers.

PJM put a price cap on the market that was creating higher wholesale costs for consumers. PJM is crafting rules that would serve to force data centers to shut off their primary power if residential customers would otherwise face power outages. But it’s very important to note that PJM does not control who pays for power. Wholesale costs are likely to remain higher than usual due to this intensive data center demand, and it is states and local utilities that decide which customers (residential, commercial, industrial, data centers) pay for the costs of these power and infrastructure cost increases.