At a Glance
- The Trump administration ordered PJM to auction $15 billion in 15-year power contracts
- Tech companies would pay even if they don’t need the electricity
- PJM was not invited to the White House announcement
- Why it matters: Northern Virginia electricity prices have already risen 10-15 % in 2025
The Trump administration is pressing America’s largest grid operator to add $15 billion of new power generation and wants tech giants to bankroll the capacity whether their data centers use it or not.
The Mandate
White House officials and governors across 13 Mid-Atlantic and Midwest states told PJM Interconnection to hold a long-term auction for 15-year generation contracts. The administration explicitly wants tech companies to bid on contracts even if they have no immediate need, according to a statement of principles released ahead of a planned event.
PJM, which serves 65 million people and includes the data-center-dense region of northern Virginia, said only that it is reviewing the document and will soon publish results of a months-long planning study aimed at adding capacity.
Behind the scenes, the grid operator signaled irritation. “We don’t have a lot to say on this,” PJM spokesman Jeffrey Shields told Bloomberg. “We were not invited to the event they are apparently having tomorrow and we will not be there.”
Rising Demand, Rising Costs
Peak load on the PJM system has climbed 10 % over the past decade and is projected to jump another 6.5 % by 2027, according to market monitor Monitoring Analytics. Much of the surge is attributed to new data centers powering artificial-intelligence workloads. Administration projections show demand from those facilities could nearly triple over the next ten years.
Wholesale electricity rates across the region are already 10-15 % higher in 2025 than the previous year. Natural-gas prices shoulder part of the blame; about 60 % of this year’s price spike traces to high fossil-fuel costs, Monitoring Analytics estimates.
| Driver | Share of 2025 Price Increase |
|---|---|
| Natural-gas prices | 60 % |
| Load growth (data centers) | Remainder |
Tech Industry Dilemma
The administration’s push puts tech firms in an unusual position: underwriting power plants they may never operate. Building a conventional gas-fired facility can take several years and cost hundreds of millions of dollars, leaving developers exposed if AI demand cools.
Tech companies have so far preferred solar-plus-battery projects because they are cheaper, modular, and faster to deploy. A utility-scale solar farm can be built in roughly 18 months and begin delivering power in phases, matching the shorter timelines of data-center construction and limiting financial risk.
Grid Operator Pushback
While the White House statement carries no legal force, it increases political pressure on PJM to accelerate capacity additions. The grid operator’s independent board must balance federal requests with state utility commissions, power-plant owners, and consumer advocates.
PJM has not committed to any specific auction format or timeline, and its terse response suggests internal resistance to being cast as the linchpin for administration energy policy.
Market Implications
If implemented, the 15-year contracts could lock in cost recovery for developers regardless of whether the power is needed, potentially raising rates for all 65 million customers in PJM’s footprint. Conversely, failure to add capacity could lead to tighter reserve margins and higher spot-market prices during peak summer and winter periods.
The standoff highlights a broader tension: policy makers want rapid, large-scale power-plant construction to support AI growth, while utilities and tech companies favor smaller, flexible resources that align with uncertain demand curves.
Key Takeaways
- The administration wants $15 billion in new generation commitments within weeks
- Tech firms would shoulder financial risk under 15-year contracts
- PJM has not agreed to the plan and was excluded from the rollout event
- Electricity prices in the region are already up double digits year-over-year
- Renewable projects remain the preferred hedge for many data-center operators
