(Bloomberg) — The biggest and most closely watched US power auction is set to offer an early glimpse of what the AI boom will cost consumers.
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PJM Interconnection LLC, which operates the largest US grid and is home to the biggest concentration of data centers in the world, is scheduled to release the results of its annual power sale Tuesday. The auction, which determines how much generators will get paid for generating capacity at new and existing power plants, is also an indicator of how high consumer utility bills will be.
Last year PJM procured supplies for a record $14.7 billion, and this year similar costs per megawatt could result in total payouts of $13 billion to $16 billion. The soaring price tag is due to booming demand from data centers, according to recent analysis from the grid operator’s independent market monitor. That’s raising concerns that consumers — not technology companies — would bear the brunt.
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The explosive energy consumption of AI data centers is “leading to massive transfer of wealth from essentially existing customers and residential customers,”said Maryland People’s Counsel David Lapp, the state advocate for residential utility consumers.
Americans across the country are already grappling with climbing utility bills as aging infrastructure and more extreme weather raise operational costs and energy demand — and PJM is becoming a test case for AI’s voracious energy needs. At the same time, the Trump Administration’s recent rollback of renewable tax incentives means much of the massive queue of power projects waiting to get built will get a lot more expensive, compounding the hit to consumers.
Last year’s auction, which saw costs rise about 600%, created a political firestorm that ultimately led PJM and the governor of Pennsylvania to agree to set both a price floor and cap for the first time in the auction. This year’s results could similarly “put policy makers’ feet to the fire,” said Barclays Plc analyst Nicholas Campanella.
PJM declined to comment.
The cost of supply last year rose to about $270 per megawatt a day while Baltimore cleared more than 70% higher and Virginia, home to the biggest concentration of data centers in the world, was close behind. Maryland saw the highest capacity costs in the last auction, with Exelon Corp.’s Baltimore Gas & Electric utility tacking on $16-$20 to consumers’ monthly bills. However, the utility reached an agreement with regulators to pass through those costs in the spring and fall months to avoid adding to to already high summer bills. Both Maryland and Virginia should see capacity costs decrease under the cap.
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