Maryland Office of People's Counsel Files Landmark FERC Complaint Challenging PJM's $2B Transmission Cost Shift

Maryland Office of People's Counsel Files Landmark FERC Complaint Challenging PJM's $2B Transmission Cost Shift

The Maryland Office of People's Counsel (OPC) filed a formal, fast-track complaint under Section 206 of the Federal Power Act against PJM Interconnection on May 7, 2026. The complaint alleges that PJM's hybrid transmission cost-allocation rules are unjust and unreasonable, forcing Maryland ratepayers to pay $2.0 billion in capital costs and $1.6 billion in cumulative 10-year revenue requirements to fund regional transmission upgrades driven overwhelmingly by out-of-state data center load growth¹ in Virginia, Ohio, and Pennsylvania.

The Cost Shift and the "Postage Stamp" Fallacy

Under PJM's Open Access Transmission Tariff (OATT) Schedule 12, regional transmission facilities (500 kV or higher) are allocated 50% based on a regional coincident peak load-ratio share ("postage stamp" method) and 50% based on solution-based distribution factor analysis (DFAX).

The Maryland OPC argues that this legacy system operates on a "basic fallacy" that regional baseline upgrades benefit the entire footprint equally. While PJM's overall peak demand is projected to grow by 42% (66 GW) by 2036, Maryland's peak demand is expected to grow by only 12% (1.5 GW). Despite causing virtually none of the incremental regional demand, Maryland ratepayers are being saddled with massive bills simply due to their geographic proximity to Northern Virginia's "Data Center Alley."

According to the affidavit of energy experts Ron Nelson and Andy Eiden:

"Across three successive PJM transmission expansion planning windows, 2022 Regional Transmission Expansion Plan ('RTEP') procurement window 3 ('2022 W3'), 2024 RTEP window 1 ('2024 W1'), and 2025 RTEP W1 ('2025 W1'), PJM's cost allocation rules have assigned Maryland ratepayers $2.0 billion in capital costs—costs that will drive up Maryland customer bills through $1.6 billion in additional revenue requirements over the next ten years... Maryland ratepayers are paying substantially for data center-driven transmission buildout by virtue of geographic proximity, not cost causation."

The bill impacts are severe and highly regressive. Over the next ten years, OPC projects:

• Residential Customers: An additional $823 million cumulative, averaging $345 per household.
• Commercial Customers: An additional $146 million cumulative, averaging $673 per business.
• Industrial Customers: An additional $629 million cumulative, averaging $15,074 per industrial facility.

Technical Inadequacies of DFAX for Data Center Loads

The complaint details how the solution-based DFAX power flow model is technically incapable of capturing the stability, short-circuit, and dynamic voltage risks that massive data centers impose on the grid.

Unlike organic native load, data centers can unexpectedly drop hundreds of megawatts of load simultaneously to protect sensitive IT equipment during grid disturbances. For example, on July 10, 2024, the Eastern Interconnection experienced a sudden, unannounced drop of 1,500 MW of data center load in Dominion's territory when a lightning strike triggered a fault and the facilities switched to backup generators. NERC is reportedly preparing a "Level 3 essential actions alert" to address these sudden computational load losses.

Furthermore, PJM's inputs are corrupted by "phantom" or speculative interconnection requests. Because developers face minimal financial barriers to entering the queue, they routinely submit duplicative requests to multiple utilities to compare timelines. PJM's planning models rate-base transmission lines to serve these speculative loads; if they fail to materialize, the annual DFAX calculation automatically shifts the stranded asset costs away from the originating utility to neighboring zones like Maryland.

Proposed Remedies and Policy Alignment

The OPC requests that FERC:

1. Zonal Cost Allocation: Immediately assign 100% of baseline transmission project costs driven by data centers to the specific PJM zones where that load is located, enabling states to recover those costs from the developers.
2. Order No. 2003 Framework for Loads: Establish a pro forma large-load interconnection standard modeled after generator interconnection rules. This would require data centers to fund 100% of upfront network upgrades "but for" their connection, subject to a "higher of" pricing policy to prevent cross-subsidies.
3. Planning Reforms: Remove data centers from baseline RTEP reliability modeling and establish separate modeling standards (such as N-1 contingencies for the sudden loss of a major load).

The complaint leverages the principles of the Ratepayer Protection Pledge signed by major hyperscalers at the White House on March 4, 2026, which guarantees that "data centers' energy needs will not increase household electricity costs." The OPC argues that PJM's regional cost-socialization rules directly undermine this federal pledge, turning projects like NextEra's $960 million Mid-Atlantic Resiliency Link (MARL) into major transmission hurdles as state advocates and regulators demand that hyperscalers "put their money where their mouth is."