Legalectric

PJM’s State of the Market report for 2025 is out. MISO’s didn’t come out until JUNE last year! The approach in MISO‘s MTEP2024 regarding data centers is markedly, MARKETedly, different!

MISO did put out a “2026 RELIABILITY IMPERATIVE REPORT” with at least one point worth noting:

Approximately 130 GW of projects — nearly half of the queue — have been withdrawn, in part due to changes to tax credits under One Big Beautiful Bill Act.

2026 RELIABILITY IMPERATIVE REPORT, p. 11.

Anyway, back to PJM’s State of the Market report for 2025, starting with Volume 1:

PJM has some interesting statements on data centers. I hear a lot of folks saying the skyrocketing electric rates are due to data centers, but in the Midwest that’s not happening yet. We’re paying for the BILLIONS in transmission, but data centers are lurking. Here’s what PJM has to say:

Data center load growth is the primary reason for recent and expected capacity market conditions, including total forecast load growth, the tight supply and demand balance, and high prices. But for data center growth, both actual and forecast, the capacity market would not have seen the same tight supply demand conditions, the same high prices observed in the 2025/2026 BRA, the 2026/2027 BRA, and the 2027/2028 BRA, and the currently expected tight supply conditions and high prices for subsequent capacity auctions. (Intro, p. 1)

The decisions about the interconnection of large new data center loads when there is not enough capacity to maintain system reliability are public, regulatory decisions because they are about competitive outcomes that are in the interests of all market participants. PJM markets are not laissez faire markets.

It is clear that continuing to simply accept the interconnection of large data center loads that cannot be served reliably because there is not adequate dispatchable capacity, is not a reasonable path forward
and is not an efficient or competitive market solution and is not a solution of any kind. That path leads
to continued shortfalls, increased reliability issues, continued maximum prices, and continued calls to
abandon markets.

The current supply of capacity in PJM is not adequate to meet the demand from large data center loads and will not be adequate in the foreseeable future. This is a simple factual issue. There is not enough capacity currently to meet the data center load. The solution is not to create reliability issues and wealth transfer issues by clearing the capacity market at the maximum price and at a quantity less than the reliability requirement by allowing the ongoing interconnection of large data center loads without adequate generation to serve them and without a clear path to adding the required capacity or to defining full curtailability.

The market solution is to require data centers to bring their own new generation. This would include an
expedited fast track load and generation interconnection process for large new data center loads that bring their own new generation with locational and temporal characteristics reasonably matched to their load profile. The preferred solution would include creating a queue for the addition of large new data center loads, which would not be interconnected until there is adequate capacity to serve them. Another solution would require data centers that do not bring their own new generation to be curtailable prior to current demand side customers but without the pretense that the data centers are providing “demand response” for which they should be paid. Given the level of data center load growth, this curtailability solution would provide a strong incentive to bring new generation, if enforced on a specific data center basis. This broad bring your own new generation solution to the issues created by the addition of unprecedented amounts of large data center load does not require a continued massive wealth transfer. (Intro p. 2).

Here’s the PJM proposal: Monitoring Analytics, LLC, Reliability Backstop Auction Design Proposal – V2 . In short, “the data centers must bear their own costs and risks and not shift them to other customers, and that the data centers must bring their own new generation in any one of a number of forms or be fully curtailable.” Intro, p. 3.

Oh, and about those “benefit/cost” or “cost-benefit” analysis in MISO that I’ve been going on about because likely costs have risen sufficiently to throw the “benefit/cost” analysis completely out of whack and how many MISO transmission projects would no longer be economically sound… MISO isn’t the only one concerned about cost increases! All transmission projects should require a MISO Tariff FF Variance Analysis, which looking at Northland Reliability Project’s public releases thus far, the MISO Variance Analysis Information Letter – 2026 03 06 process isn’t stringent enough, well, anyway, here’s the PJM 2025 State of the Market released

March 12th, 2026 take, from page 94 of the State of the Market report for 2025:

Yet in response to Comments I’d submitted as an individual in the Tranche 2.1 Power on Midwest docket, CN-25-117, the applicants state:

Once more with feeling, “When actual costs exceed estimated costs, the benefit/cost analysis is effectively meaningless…” eh, PJM??? All the MISO Tranche 2.1 projects rely on the MISO benefit/cost analysis for MISO approval and Commission approval. They don’t do an independent analysis to determine whether the project makes any sense. This is not rocket science, but it is so very clear why they don’t want to look at those cost increases!

Here’s the rest of the PJM State of the Market report, and it’s a LOT:

Volume II
Volume II (22MB PDF) contains detailed analysis and results.
Preface (45KB PDF)
Table of Contents (84KB PDF)
Section 1 – Introduction (2MB PDF)
Section 2 – Recommendations (332KB PDF)
Section 3 – Energy Market (5MB PDF)
Section 4 – Energy Uplift (268KB PDF)
Section 5 – Capacity Market (3MB PDF)
Section 6 – Demand Response (1MB PDF)
Section 7 – Net Revenue (1MB PDF)
Section 8 – Environmental and Renewable Energy Regulations (1MB PDF)
Section 9 – Interchange Transactions (1MB PDF)
Section 10 – Ancillary Service Markets (3MB PDF)
Section 11 – Congestion and Marginal Losses (4MB PDF)
Section 12 – Generation and Transmission Planning (2MB PDF)
Section 13 – Financial Transmission and Auction Revenue Rights (1MB PDF)