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Residential bills may rise 30-60% by 2030, ICF analysis

shows

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PJM's capacity auction prices soared 1,000% from two years

ago

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Record-high auction prices impacting power bills

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PJM to address reliability and cost with stakeholders

By Laila Kearney and Tim McLaughlin

NEW YORK, Aug 7 (Reuters) - Homes and businesses in the

largest U.S. electric grid - operated by PJM Interconnection -

could face rate increases of up to 60% over the next five years

as the energy needs of Big Tech's data centers intensify,

according to analysts and consumer advocates.

PJM covers the largest amount of data center demand in the

world, and the region is becoming a test case for how AI's

energy needs will hit homes and businesses, particularly as new

electricity supplies are slow to be added.

The latest energy auction held in July by the PJM

Interconnection to cover electricity needs on peak demand days

soared to $329 a megawatt day, a roughly 1,000% jump from two

years ago.

Those prices funnel down to power bills in PJM's territory,

which stretches from the Mid-Atlantic region westward, covering

all or part of 13 states and the District of Columbia.

Analysts at ICF, a global consulting and technology services

firm, said customer power bills in PJM could increase

residential retail rates between 30% and 60% by 2030, largely

due to rising costs caused by the capacity auctions, which

determine the price paid to power plant owners to run overtime

during extremely high power use.

"This outcome underscores PJM's critical need for capacity,

driven largely by surging demand from data centers, which is

expected to outpace new generation additions," ICF said.

In the short term, PJM expects the recent auction to have a

year-over-year impact of 1.5% to 5% on utility bills starting

June 2026.

That would account for the capacity portion of bills alone,

whereas utility spending on power lines and other build-outs and

services to meet growing loads will also hit customer bills.

With the rest of demand sources in PJM largely flat, data

centers are pretty much driving all of those rising costs, said

John Quigley, a senior fellow at the Kleinman Center for Energy

Policy at the University of Pennsylvania.

"They are ground zero in terms of why we're seeing rising

electricity costs," Quigley said.

Data centers make up more than 90% of the new power demand

PJM estimates it will see by the end of the decade, the grid

operator has said in filings.

"While economic growth is welcome in the PJM footprint, we

recognize the impact that data centers are having on the

system," PJM said in a statement. "We're going to seek to

address some of these challenges around reliability and cost

with data center owners, consumers and all of our stakeholders,

including our states, in the near future."

UTILITY SPENDING

On the supply side, rising power bills on PJM turf are

caused by multiple factors, and capacity auctions are one

component.

The prices from those auctions in recent years take effect

about a year out, so price impacts from the latest one in July

will take effect next summer.

Power bills are also affected by spending by utilities to

build power lines and upgrade systems to deliver electricity to

homes and businesses.

As data centers drive power demand higher and spur the need

to build new generation capacity, consumer advocates said they

fear residential customers are subsidizing the AI ambitions of

wealthy corporations.

Some of the biggest utilities in PJM, including AEP

and Dominion, this year announced significant increases to

capital expenditure plans to meet new data center demand.

That spending is paid for mostly by the public.

As a way to soften the financial blow to customers, some

utilities, including ones in New Jersey and Maryland, began to

offer rebates.

Those measures, however, are mostly temporary, and long-term

fixes remain unclear if the pace of new power demand outstrips

supply.

"We have residential customers providing massive subsidies

to some of the wealthiest corporations in the world to support

their data centers," said David Lapp, the head of Maryland's

Office of People's Counsel, a state agency that advocates for

residential utility consumers. "It's just a massive transfer of

wealth from small customers to data centers."