Power prices in the nation’s largest grid market jumped almost 76 percent in the first quarter year-over-year, showcasing how energy demand driven by data centers is remaking the economy across the mid-Atlantic and Midwest.
Monitoring Analytics, the independent monitor for the regional grid, PJM Interconnection, said Thursday that the total cost of wholesale power in the region increased to $136.53 per megawatt-hour in the first three months of the year, up from $77.78 during the same quarter in 2025. The findings highlight the inflationary pressures facing residents of multiple battleground states heading into midterm elections.
“The price impacts on customers have been very large and are not reversible,” the market monitor said. “The price impacts will be even larger in the near term unless the issues associated with data center load are addressed in a timely manner.”
Actual and expected growth of large data centers for powering artificial intelligence are driving electricity prices higher. That has contributed to a growing disconnect between electricity supply and demand inside PJM. The report noted that data center load included in PJM’s last two future capacity auctions translated into a $13 billion cost increase for customers across the sprawling grid.
PJM, which is overseen by the Federal Energy Regulatory Commission, covers more than 67 million people in all or part of 13 states, including the world’s largest concentration of data centers in Virginia. PJM executives have been been under pressure from governors, utility leaders and FERC Chair Laura Swett to change how it operates, considering the power demands of AI.
The region could run short on electricity supply as early as next year. In a white paper this month, the grid operator warnedthe push for data centers is clashing with the retirement of coal and gas plants, higher costs for new generators and an outdated interconnection process. It recommended three options to address the challenges, including requiring utilities and suppliers to make longer-term commitments to secure power.
In an emailed statement, PJM spokesperson Jeff Shields said the rising prices outlined in the report “are an accurate indication of the tightening supply and demand condition in the wholesale markets and the markets are functioning correctly by appropriately reflecting these conditions.”
“PJM recognizes the impact of these costs on consumers,” Shields added. “PJM is working with states and member companies to address these consumer impacts on multiple fronts, including extending market caps put in place since the 2025/2026 auction, authorizing multiple transmission expansion projects that are now in development, and reforming wholesale electricity market rules.”
In the first quarter, capacity costs to ensure adequate supply across PJM surged 398 percent compared to roughly 5 percent for transmission. Electricity from natural gas, oil and solar generation increased. The region saw a decline in wind and coal-burning generation.
Monitoring Analytics called for requiring data centers to bring their own generation. That idea echoes the “ratepayer protection pledge” backed by the White House and large technology companies earlier this year.
“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,” the report said.
Nationally, there has not always been a link between higher prices and more data centers. The cost of transmission and the price of natural gas have been a chief driver of higher power prices in the past, according to Lawrence Berkeley National Laboratory.
Yet data centers are likely to play a greater role in price increases as facilities get larger and larger and the grid increasingly gets clogged, experts say. The Bureau of Labor Statistics reported this month that electricity costs increased more than 6 percent over the past year, higher than the average for other products.
The East’s dense population and industrial economy pose challenges for PJM’s high-voltage grid. But PJM executives have been heavily criticized for not responding more urgently to rapidly rising prices in its power market and to the giant backlog of generation projects waiting to be brought onto the grid.
Pennsylvania Gov. Josh Shapiro had threatened to pull the state out of PJM if the grid operator didn’t do something about prices. That, along with pressure from other governors and the White House, led to a cap on future capacity prices through 2029.
Major AI companies that want new data centers connected to the regional grid are pressing the Trump administration for answers. Expressing similar concerns about PJM’s governance, the chief executive of Ohio-based utility giant American Electric Power also opened the door to leaving PJM in comments during the company’s recent quarterly earnings call. AEP plans to spend almost $80 billion over the next five years on new generation and transmission.
In a statement Thursday, Gil Quiniones, CEO of Illinois-based ComEd, said the utility “is taking proactive steps to support customers who may face financial strain due to anticipated PJM supply cost increases.”
