ER26-3380-000 · 2026-09-28 · COMMITTEE ON ENERGY AND COMMERCE

Comments of U.S. House of Representatives Committee on Energy and Commerce Ranking Member Frank Pallone, Jr. urging FERC to make important improvements, approve amended proposals, etc. re energy costs from data centers,

BRETT GUTHRIE, KENTUCKY 
CHAIRMAN 
FRANK PALLONE, JR., NEW JERSEY 
RANKING MEMBER 
ONE HUNDRED NINETEENTH CONGRESS 
Congress of the United States 
House of Representatives 
COMMITTEE ON ENERGY AND COMMERCE 
2125 RAYBURN HOUSE OFFICE BUILDING 
WASHINGTON, DC 20515-6115 
 
Majority  (202) 225-3641 
Minority  (202) 225-2927 
 
 
 
 
 
 
 
 
 
 
September 28, 2026 
 
The Honorable Laura V. Swett 
Chairman 
Federal Energy Regulatory Commission 
888 First Street NE 
Washington, DC 20426 
 
RE: Docket Nos. ER26-3380, ER26-3515 
 
Dear Chairman Swett: 
 
I write in reference to two recent proposals from PJM designed to help shield Americans 
from the skyrocketing energy costs from power-hungry data centers.  While I support many of 
the provisions included in the proposals, I am concerned that they do not go far enough and 
believe the Federal Energy Regulatory Commission (FERC) should use its authority to improve 
PJM’s proposals to protect families across the mid-Atlantic region.  While these proposals are 
not sufficient by themselves, they represent an important and necessary step to protect 
Americans’ access to affordable and reliable electricity, and I urge FERC to approve them in 
part, with a few important exceptions. 
 
Americans are deeply frustrated and concerned that the rapid and unceasing development 
of data centers is driving up their monthly energy bills.  At the end of the day, protecting 
Americans’ power bills is FERC’s responsibility.  While the Commission has initiated potentially 
promising actions that would impact roughly two-thirds of the nation, it is not enough. 
 
Last year, Energy Subcommittee Ranking Member Kathy Castor and I wrote the 
Commission to warn how data centers could make electricity unaffordable to Americans, and I 
urged FERC to take immediate action to protect ratepayers and ensure that data centers paid their 
fair share.1  Since then, the situation has only worsened.  Data centers are responsible for an 
increase in PJM capacity market costs of nearly $30 billion since the summer of 2024 – costs 
 
1 Letter from Frank Pallone Jr., Ranking Member, House Committee on Energy and Commerce, to Laura V. 
Swett, Chairman, Federal Energy Regulatory Commission (December 5, 2025).

The Honorable Laura V. Swett 
September 28, 2026 
Page 2 
 
that my constituents will ultimately have to pay.2  Demand for electricity over the next decade is 
expected to explode – PJM is forecasting a roughly four percent increase in peak demand each 
year, driven almost entirely by the massive growth in data centers.3   
 
Under PJM’s proposals new data centers would have to pay for their own generation 
capacity and data centers that do not develop their own new generation capacity would be the 
first ones to have their lights shutoff in the face of larger grid issues.  The second proposal is 
precisely in line with one of the principles I suggested last year to FERC.4  While I have 
concerns that the specifics of PJM’s proposals are insufficient to grant ratepayers the protections 
they need, broadly these core concepts are deeply necessary, and FERC should work to 
implement and improve them as quickly as possible. 
 
I support one key idea across both PJM’s Reliability Backstop Procurement (RBP) and 
Interim Resource Adequacy Service (IRAS) – ensuring that data centers are responsible for 
bringing new generation capacity to the grid.  Data centers are largely responsible for PJM’s 
current reliability and cost crisis.  The only way out is more generation, and the data centers 
responsible for PJM’s issues should be the ones responsible for finding and incentivizing 
generation to fix those issues. 
 
I also want to express my support for PJM’s proposed allocation of costs for its RBP 
auction to wholesale electricity customers.  While FERC largely lacks the authority to allocate 
costs directly to data centers, it must get as close as it can – by allocating costs not to the entire 
PJM region, but to the zones that are fueling data center growth.  New Jersey ratepayers have not 
caused PJM’s current reliability issues, and therefore data center owners and operators should 
pay to fix the system they are largely responsible for breaking. 
 
Regardless of whether FERC decides to accept the broader IRAS filing, it must retain a 
critical provision to exclude any future data center load that refuses to procure its own generation 
capacity from PJM’s capacity auction.  Last year, my constituents saw an outrageous 20 percent 
increase in their power bills, fueled by skyrocketing prices in PJM’s capacity market.5  Over 90 
percent of the increased demand PJM expects to see on its system by the end of the decade is 
from data centers, and excluding data centers that do not partner with generation capacity will 
help prevent my constituents from a future price shock even worse than the one they have 
experienced over the past 18 months.6  
 
Unfortunately, PJM’s proposed approaches are incomplete.  The RBP only covers the 
approximately 6.8 gigawatt gap between PJM’s reliability targets and recent generation capacity 
 
2 Monitoring Analytics, LLC, State of the Market Report for PJM: January - June 2026 (Aug. 2026) 
3 PJM Interconnection, 2026 PJM Load Forecast Report (Jan. 2026). 
4 See note 1. 
5 New Jersey Residential Customers Face 20% Bill Hikes, Driven by PJM Capacity Prices: BPU, UtilityDive 
Feb. 13, 2025). 
6  Letter from David E. Mills, Chair, PJM Board of Managers, to PJM Stakeholders (Aug. 8, 2025).

The Honorable Laura V. Swett 
September 28, 2026 
Page 3 
 
auctions.  It does not cover the broader demand imposed by existing and soon-to-come-online 
data centers upon PJM’s energy and capacity markets that have caused PJM prices to skyrocket 
since last June.  It is those data centers that are responsible for the increases in my constituents’ 
electricity bills over the last few years – not data centers that will not come online until 2028 or 
later.  I strongly believe the costs for procuring all additional generation capacity for data centers 
should be allocated to zones with large amounts of data center-driven load growth instead of 
across PJM as a whole. 
 
Similarly, provisions of the IRAS proposal do not go far enough to protect consumers.  
PJM’s requirement that new data centers bring their own new generation capacity effectively 
turns off and resets if PJM can meet its reliability requirement for three years in a row.  Given the 
Commission’s goal of protecting ratepayers and providing American households with a stable 
power grid, letting new data centers off the hook after three years without a crisis does not meet 
the moment.  If passing data center costs onto other customers is unjust and unreasonable now, it 
would still be unjust and unreasonable in three years – FERC must reject that part of PJM’s 
proposal.  Likewise, PJM’s proposal to compensate new data centers for their downtime due to 
grid instability caused by those very same data centers fails to grant ratepayers the protection 
they need.  I echo the New Jersey Board of Public Utilities’ proposal to strike the compensation 
mechanism from IRAS.7 
 
While I commend PJM on its proposal to establish a registry of large consumers of 
electricity (including data centers), that registry – or as much of it as possible – must be public.  
A registry of large consumers of electricity would be invaluable for improving forecasts of 
electricity demand, which even PJM has noted needs drastic improvement.8  But that is not all.  
Over the last year, Americans have become increasingly concerned over the air, water, and noise 
pollution issues represented by data centers.  Instead of responding with transparency, data center 
developers and utilities have attempted to wield non-disclosure agreements to block information 
on data center developments from the public view.  In one instance earlier this month in 
Arkansas, a utility attempted to sue a newspaper for publishing information about the utility’s 
involvement in a data center project.9  Making PJM’s registry as public as possible, while still 
mandating participation from data centers and other large consumers of electricity, would go a 
long way in providing the transparency around data centers that we desperately need.  A public 
registry is also the only way of facilitating public confidence in the many differing commitments 
Big Tech companies have made to not increase residential electricity rates.  The public must have 
access to data center-specific information on capacity, peak-shaving or demand response 
agreements, and any arrangements a data center has made to bring its own generation capacity.  
 
Finally, while PJM has gone as far as it can under FERC’s current jurisdiction to ensure 
that data centers are responsible for the costs they impose upon the grid, the ultimate authorities 
 
7 PJM Interconnection, L.L.C., Supportive Comments and Limited Protest of the New Jersey Board of Public 
Utilities, Docket No. ER26-3515-000 (Sep. 3, 2026). 
8 Letter from David E. Mills, Chair, PJM Board of Managers, to PJM Stakeholders (Jan. 16, 2026). 
9 How NDAs Keep AI Data Center Details Hidden from Americans, NBC News (Oct. 28, 2025); Judge Refuses 
to Block Arkansas News Reporting on Google Data Center Energy Documents, CNBC (Sep. 2, 2026).

The Honorable Laura V. Swett 
September 28, 2026 
Page 4 
 
that make that guarantee are state ratemaking authorities.  FERC must ensure as a part of its 
decisions in these filings that PJM, load serving entities, transmission owners, and the data 
centers themselves provide state regulators with enough information to properly allocate any 
costs resulting from data centers.  If state regulators do not have the right information, then I fear 
American families will be left on the hook for Big Tech’s investments. 
 
 
I urge FERC to make these important improvements to PJM’s proposals and approve the 
proposals as amended as quickly as possible, and to act expeditiously in its related show-cause 
orders for grid operators around the country.  If FERC gets this right, then it will have granted 
American families a measure of protection from the costs imposed by data centers.  If the 
Commission falls short, then American families will pay the price.  I hope FERC takes these 
suggestions for improvements to PJM’s proposals seriously, and I stand ready to work to keep 
electricity affordable and reliable across the country.  
 
 
Sincerely, 
 
 
 
 
Frank Pallone, Jr. 
Ranking Member 
 
 
 
 
 
cc: 
The Honorable David Rosner 
 
Commissioner 
 
Federal Energy Regulatory Commission 
 
 
The Honorable Lindsay S. See 
 
Commissioner 
 
Federal Energy Regulatory Commission 
 
 
The Honorable Judy W. Chang 
 
Commissioner 
 
Federal Energy Regulatory Commission 
 
 
The Honorable David A. LaCerte 
 
Commissioner 
 
Federal Energy Regulatory Commission