White House pushes PJM to add $15 billion in power plants, shifting costs to data centers

Standing in a chandeliered room of the Eisenhower Executive Office Building steps from the White House, Interior Secretary Doug Burgum promised something few politicians dare to say out loud about new power plants.

“This initiative will ensure we usher in the age of artificial intelligence with new power plants funded by the technology companies, not taxpayers,” Burgum said on Jan. 16, flanked by a row of Democratic and Republican governors.

The announcement marked the debut of a Trump administration plan to push the nation’s largest grid operator, PJM Interconnection, to underwrite more than $15 billion in new power generation across the Mid-Atlantic and parts of the Midwest. The projects are framed as a way to shore up the electric grid and tame rising bills as data centers and artificial intelligence drive electricity demand to levels the region has not seen in decades.

At the heart of the proposal is a blunt political message: Big Tech should pay for the power hunger of the AI boom, not families and small businesses.

A new White House-centered energy push

The effort is being led by the National Energy Dominance Council (NEDC), a Trump-created body housed in the White House that is rapidly emerging as a central player in U.S. energy and infrastructure policy. The council says it has secured support from a bipartisan group of governors in every state served by PJM, which delivers power to about 67 million people in 13 states and the District of Columbia.

Companion releases from the Interior and Energy departments call on PJM to hold what officials describe as an “emergency power auction,” also referred to as a “Reliability Backstop Auction.” The auction would solicit more than $15 billion of “reliable baseload power generation” under 15-year contracts, providing long-term revenue certainty to new plants.

At the same time, the administration and governors are urging PJM to temporarily overhaul its market rules so that most of the cost of those new plants falls on the fast-growing data centers and other large technology loads that are driving up demand.

“High electricity prices are a choice,” Energy Secretary Chris Wright said. “That’s why President Trump asked governors across the Mid-Atlantic to come together and call upon PJM to allow America to build big reliable power plants again.”

How the cost shift would work

Under the framework outlined by the Energy Department, new costs from the auction would be allocated primarily to “load-serving entities with new data centers that have not self-procured new capacity or agreed to be curtailable.” In plainer terms, utilities or power suppliers serving data centers that do not make separate arrangements to secure power—or allow their use to be cut back during peak times—would pay more.

The department says PJM should “make data centers pay more for new generation than residential customers” and require them to pay for new plants “built on their behalf—whether they show up and use the power or not.”

Administration officials argue that approach is justified by the rapid growth of energy-hungry AI computing clusters and server farms, especially in northern Virginia and surrounding states. Data centers used about 4.4% of U.S. electricity in 2023 and could consume 6.7% to 12% by 2028, according to a federal study by Lawrence Berkeley National Laboratory, with much of the increase attributed to AI.

In Virginia, where Gov. Glenn Youngkin joined Burgum on stage, data centers already account for an estimated quarter of the state’s power use. Local utilities have warned that serving the expanding clusters in Loudoun and Prince William counties requires major grid upgrades and new generation—costs that are starting to show up in household bills.

Similar pressures are emerging across PJM, which coordinates wholesale power markets and grid operations from Illinois to New Jersey and North Carolina. The region has seen a wave of coal and some gas retirements in recent years, while new projects have been slow to connect. PJM has warned of tightening reserve margins and, in one recent capacity auction, failed to procure enough resources to meet its standard reliability target.

What kind of plants—and what it means for climate goals

Burgum and Wright blamed those strains on what they described as the previous administration’s “energy subtraction agenda,” including what they called “forced closures of coal and natural gas plants.” The Energy Department said PJM had “forced nearly 17 gigawatts of reliable baseload power generation offline” under policies that, in the administration’s view, favored wind and solar.

Environmental and clean energy advocates dispute that characterization, noting that many coal plants have shut down because they are more expensive than gas and renewables and face tightening pollution rules. They also argue that the region could meet rising demand with a mix of renewable energy, battery storage and efficiency improvements, rather than locking in long-lived fossil fuel plants.

The Jan. 16 materials do not specify which types of power plants must be built under the emergency auction. But the administration repeatedly contrasts “intermittent energy resources (wind, solar)” with “reliable baseload generation resources (coal, natural gas, nuclear)” and has moved in other actions to slow offshore wind and open more offshore areas to oil and gas leasing.

NEDC’s founding executive order, signed by President Donald Trump on Feb. 14, 2025, directs the council to “rapidly facilitate approvals for energy infrastructure,” including gas pipelines, power plants and small modular nuclear reactors. Senior advisers have publicly emphasized a fossil fuel–first approach and described renewables as heavily subsidized and not central to the strategy.

That broader context suggests the $15 billion push in PJM is likely to favor new gas-fired plants, life extensions for existing coal units and possibly early nuclear projects, rather than large-scale wind and solar backed by batteries.

Bipartisan governors, big stakes for Big Tech

The political coalition behind the plan is notable in a polarized energy debate. On Jan. 16, Youngkin, a Republican, appeared alongside Democratic governors Wes Moore of Maryland and Josh Shapiro of Pennsylvania at the White House complex. News outlets reported that Ohio’s governor joined meetings on the plan and that governors from all PJM states ultimately signed onto a set of principles supporting the effort.

The governors cited mounting complaints about higher electric bills and worries over blackouts as they balance ambitious climate pledges with surging data-center and industrial demand.

“We have to make sure our grid is reliable and affordable for our families and our businesses,” Moore said in an interview published the same day. “At the same time, we can’t ignore the reality that AI and data centers are coming, and they come with a real cost.”

For technology companies, the proposal presents both a threat and an opportunity.

On one hand, the cost-allocation rules would significantly increase the price of doing business in PJM for hyperscale cloud and AI operators that rely on the shared grid without securing their own power supplies. On the other, the plan explicitly offers long-term contracts and a path for companies to finance or co-develop dedicated generation—from gas turbines to advanced nuclear—that would guarantee power for their campuses.

Federal officials did not name specific companies in their releases, referring instead to a “coalition of leading technology companies” expected to participate. Major cloud and AI providers—including Microsoft, Amazon, Google and Meta—have already signed large, long-term power deals around the country and are exploring on-site generation, but none publicly confirmed backing the PJM framework on Jan. 16.

Regulatory hurdles and unanswered questions

Consumer advocates and some energy economists say the ultimate impact on household bills will depend on how PJM designs and implements the auction and associated tariffs—and how accurately it forecasts long-term demand.

Shifting more of the incremental capacity cost to new large loads could shield existing customers, they say, but only if the plants run as expected and data centers continue to grow. If demand falls short or policy shifts make new fossil plants less competitive, some of the financial burden could still migrate back to general ratepayers through transmission charges or backstop reliability measures.

The initiative also sets up potential clashes with state climate laws. Several PJM states, including New Jersey, Maryland and Virginia, have statutes targeting steep reductions in greenhouse gas emissions and, in some cases, 100% clean electricity. Long-term contracts for new coal or gas plants could be difficult to reconcile with those mandates unless paired with carbon capture or other mitigating measures that are not mentioned in the Jan. 16 documents.

There are also questions about NEDC’s influence over an independent grid operator.

PJM, a nonprofit corporation regulated by the Federal Energy Regulatory Commission, is responsible for proposing its own market rules and capacity mechanisms. Any “emergency power auction” design and cost-allocation changes would need to be filed with FERC, which could approve, reject or modify them after a public process.

Separately, FERC has already directed PJM to develop new rules for “AI-driven data centers and other large loads co-located with generating facilities,” underscoring the federal government’s focus on how AI reshapes grids. The NEDC-backed plan raises the stakes by attaching a large dollar figure and a political timetable to those technical debates.

For now, the Jan. 16 agreement is a statement of intent rather than a binding tariff. PJM has said it is reviewing the governors’ and administration’s requests but has not yet committed to a specific auction design.

However the details land, the PJM proposal may be the first large-scale test of a question that is likely to reverberate far beyond the Mid-Atlantic: as AI and data centers drive up the nation’s electricity use, who should pay for the power plants that keep the servers humming—and what kind of grid will the country build in response?