PJM Interconnection, the largest electricity grid operator in the U.S., has issued a report warning of systemic stress caused by surging demand from data centers and the retirement of aging power plants. Managing power for 13 states and Washington, D.C., PJM says the region is shifting from an era of surplus to one of scarcity, driven by economic electrification and supply chain delays. The current market design, based on a 'shared reliability compact,' is under strain as price volatility threatens consumer bills and investor confidence.

The organization’s leadership has called for a reevaluation of market rules, proposing three reform pathways. One would shift most power procurement to long-term contracts to reduce volatility. Another would end equal reliability for all users, requiring large consumers like data centers to fund or build their own generation. A third option combines long-term contracts with a new revenue model emphasizing actual electricity production over plant availability.

Pennsylvania Governor Josh Shapiro has challenged PJM’s pace on interconnections and market transparency, while federal regulators have extended price controls through 2030. PJM CEO David Mills emphasized that market legitimacy—built through inclusive deliberation—is essential for any durable solution. With no final decision made, stakeholders are now being invited into a critical conversation about the future of power reliability and fairness.