Lawmakers press for tighter rules on data‑center load forecasts after PJM testimony
Summary
Multiple legislators urged stricter state gating rules—financial commitments, deposits or firm contracts—so speculative data‑center proposals can’t skew PJM load forecasts and raise auction prices. PJM and experts said better transparency and state coordination can reduce forecasting error.
Lawmakers at the March 28 joint hearing pressed regulators and PJM for tools to prevent speculative large‑load projects from inflating demand forecasts and contributing to higher capacity prices.
The problem described: PJM and New Jersey officials said a surge of large‑load entries in interconnection and distribution queues—many tied to proposed data centers and AI facilities—has materially changed load projections for the region. Committee members asked for more public transparency and suggested state gating mechanisms so only projects with demonstrated financial commitment and firm buying contracts feed into statewide and PJM forecasts.
Options discussed
- Financial gating and proof of commercial commitment: Asim Haq (PJM) and several state witnesses identified examples in Ohio and Indiana where states require deposits or firm off‑take agreements for large new loads before those projects appear in official forecasts. - Colocation and transmission treatment: Witnesses noted that data centers collocated behind generator meters may avoid transmission charges and remove generation capacity from the market; the hearing asked FERC, PJM and BPU to clarify treatment of behind‑the‑meter large loads. - Demand‑response and hedging: PJM and experts stressed demand‑response programs and procurement hedges as near‑term tools to blunt price volatility while longer‑term supply is developed.
Why legislators pressed the point
Several members said they need stronger rules to avoid “phantom demand” that can produce auction price signals and lead to preemptive rate increases. They asked the state to consider legislative gating rules or require larger developers to post deposits or demonstrate long‑term customer contracts before their load is treated as firm in forecasting models.
Bottom line
Multiple experts at the hearing urged cross‑state cooperation: because PJM is a multi‑state grid, forecasting and gating policies will be more effective if adopted regionally rather than by a single state. Lawmakers said they would examine state‑level gating measures and ask BPU and Rate Counsel to model potential benefits.
