Maryland Challenges PJM Transmission Cost Rules Over $2B Data Center Cost Shift
On May 7, 2026, the Maryland Office of People’s Counsel (OPC) filed a landmark complaint with the Federal Energy Regulatory Commission (FERC) against PJM Interconnection (Docket No. EL26-63-000). The complaint alleges that PJM's transmission cost allocation rules violate the Federal Power Act by unfairly saddling Maryland utility customers with $2 billion in capital expenditures—translating to $1.6 billion in higher electric bills over the next decade—to fund transmission lines driven by out-of-state data center growth, primarily in Northern Virginia.
The filing represents a major regional flashpoint in the AI data center buildout, illustrating how a multi-state grid's rules can shift massive infrastructure costs from the states hosting data centers to their neighbors.
The Cost-Shift Calculations
According to an expert affidavit supporting the OPC complaint, PJM’s rules will result in a $1.6 billion bill surcharge for Maryland ratepayers (primarily customers of Baltimore Gas and Electric and Pepco) over the next ten years, despite Maryland having very modest native load growth:
- Residential Customers: $823 million in added costs (approximately $345 per average household).
- Commercial Customers: $146 million in added costs (approximately $673 per average business).
- Industrial Customers: $629 million in added costs (approximately $15,074 per average industrial user).
"Maryland customers have neither caused the need for these billions in new transmission projects nor will they meaningfully benefit from them... PJM’s cost allocation rules are broken." — Maryland People’s Counsel David S. Lapp, May 7, 2026
The Cost Allocation Loophole
The dispute centers on PJM’s "hybrid" transmission cost allocation methodology for high-voltage projects (rated 500 kilovolts or higher), which PJM has used to allocate $22 billion in transmission projects approved over the last three years:
- The Pool-Wide Split: 50% of high-voltage project costs are allocated broadly across all PJM transmission zones based on each zone's proportion of total grid demand, regardless of which zone caused the upgrade.
- The Power-Flow Split: The remaining 50% is allocated based on "power flow" modeling, which predicts how much power physically flows through a transmission facility to reach various areas. Because Maryland is geographically adjacent to Northern Virginia's "Data Center Alley" (located in Dominion Energy’s zone), Maryland's grid assets are heavily swept into these power-flow models.
The OPC points out that state-level "large-load tariffs" (such as those approved in Ohio or Oregon) are powerless to stop this cross-border cost shifting, as they only govern retail rates within a single state's borders.
Violation of the White House Pledge
The OPC's complaint specifically highlights that PJM’s rules undermine the "Ratepayer Protection Pledge" signed by hyperscale data center developers (including Amazon, Google, Meta, and Microsoft) at the White House on March 4, 2026. Under that pledge, developers agreed to:
"...pay for new power delivery infrastructure upgrades to service their data centers, including adequate network upgrade costs to ensure that these expenses are not passed on to the ordinary household."
The OPC argues that PJM's regional cost-spreading mechanism directly violates the spirit of this pledge by forcing ordinary households in neighboring states to foot the bill.
speculative Load and Utility Incentives
The complaint also warns of "extreme uncertainty" regarding whether projected data center loads will actually materialize. Under current regulatory frameworks, regulated utilities face very little risk because they earn a guaranteed rate of return on equity (ROE) on transmission capital expenditures. If a utility builds a massive transmission line for a speculative data center that is later canceled, the utility still profits, while the stranded-asset risk is borne entirely by existing ratepayers.
Proposed Remedies
The Maryland OPC has petitioned FERC to order PJM to:
- Assign data center-driven transmission costs directly to the specific PJM zones where the data centers are physically located (e.g., Dominion Energy's zone in Virginia).
- Alternatively, directly charge the transmission upgrade costs to the specific large-load data center customers causing the upgrades.