In May 2026, Maryland’s Office of People’s Counsel told the Federal Energy Regulatory Commission that residential ratepayers in the state would absorb roughly $823 million in new transmission costs over the next decade — about $345 per average customer — for power-line projects that exist mainly to serve data center demand concentrated in Virginia. By July, a coalition that had grown to include Ohio’s Consumers’ Counsel, Delaware’s Division of the Public Advocate, and the Illinois Attorney General’s Office was asking FERC to go further and rewrite the cost-allocation rules themselves. This is no longer a theoretical fairness debate. It is an active multi-state regulatory fight over who pays for the grid a capacity buyer is counting on, and the outcome will shape power costs, interconnection timelines, and political risk in every PJM market for years.
How the costs got socialized in the first place
The mechanics are not new, but the scale is. A Union of Concerned Scientists issue brief on PJM, published in September 2025, found that utilities started more than 150 local transmission projects across seven PJM states between 2022 and 2024 to serve data center connections. In 2024 alone, 130 of those projects were approved at a combined cost of about $4.36 billion. Only six projects — roughly 5 percent — were paid directly by the customer that triggered them. The other 95 percent, over $4 billion, was folded into general transmission charges and recovered from the entire retail ratepayer base. Virginia accounted for just under $2 billion of that 2024 spending, Ohio $1.3 billion, and Pennsylvania $492 million.
UCS traces the socialization to a jurisdictional gap: FERC oversees high-voltage transmission while state utility commissions set retail rates, and PJM’s Transmission Expansion Advisory Committee process treats most of these projects as informational rather than requiring a dedicated, trackable customer charge. The cost-allocation rules themselves predate loads above 100 megawatts, which is now a routine single-building ask for an AI campus. UCS’s recommended fix — a distinct large-load customer class with transparent, trackable charges — is close to what large-load tariffs are trying to do state by state, but the brief found the paper trail that would prove a project is being paid for directly is largely missing today.
Maryland’s complaint and the show-cause order
Maryland’s filing turned the accounting problem into a legal one. The Office of People’s Counsel argues PJM’s allocation formulas violate the Federal Power Act by spreading costs too broadly across a region when the demand driving them is concentrated in one zone, and that PJM’s planning models were built for slow, steady load growth rather than the sudden, geographically lopsided surge data centers represent. “The rules are really an anachronism,” People’s Counsel David Lapp said of the formulas. “I think common sense tells you data centers should be paying for those projects.”
FERC responded in June 2026 with a show-cause order requiring PJM to demonstrate that it provides enough transparency on data-center-driven transmission costs for states to allocate them as they see fit. Maryland’s office called that insufficient and, on July 17, 2026, asked FERC to expand the order into an actual rule change: require PJM to credit any cost-recovery-agreement revenue back to the ratepayers who fronted the money, and clarify what data centers actually owe under those agreements in the first place. The office’s own worked example is illustrative of the scale of the gap: a 200-megawatt data center requiring $232 million in transmission investment generates about $36 million in first-year transmission revenue requirements, of which roughly $15 million — 42 percent — falls on non-data-center customers under current PJM rules. PJM and its member utilities were due to respond to the underlying complaint by late July; FERC can rule on the written record or send the matter to an evidentiary hearing, either of which could take months.
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📞 Book a Discovery CallThe capacity market is absorbing it too
Cost allocation on transmission is only half the picture. Monitoring Analytics, PJM’s independent market monitor, found that data center load growth drove a $9.4 billion increase in costs in the 2025/2026 Base Residual Auction, with overall capacity market costs up 180 percent. Its conclusion was blunt: “the current conditions are not the result of organic load growth,” but are “almost entirely the result of large load additions from data centers.” Those capacity costs flow straight into retail electric bills across the PJM footprint, from Illinois to Washington, D.C., independent of how any single transmission project gets allocated. Together, the transmission and capacity findings are why state consumer advocates, utility regulators, and now a multi-state coalition are treating data center-driven costs as a single, compounding political liability rather than a series of unrelated line items.
What other grid operators do differently
PJM is something of an outlier in how much customer-driven, high-voltage cost it socializes, which matters for buyers comparing regions. In ERCOT, developers typically pay interconnection costs directly. CAISO requires line-by-line cost attribution. ISO-NE generally requires loads over 20 megawatts to fund their own connection facilities. MISO uses a hybrid model with bespoke tariffs above roughly 50 to 100 megawatts, and SPP has local zones that typically absorb only a third of costs on mid-voltage projects. None of these are free of controversy, but they give a buyer a clearer, earlier answer to “who pays” than PJM’s current rules do.
It’s worth holding the counterargument seriously, though. PJM and several utilities maintain that many of these transmission builds — including the Maryland Piedmont Reliability Project and the Mid-Atlantic Resiliency Link now facing local opposition in Garrett and Allegany counties — are reliability investments that benefit the whole system, not giveaways to any single customer, and that treating every megawatt of new load as a line-item villain risks underbuilding the grid the region needs regardless of who’s driving demand. Regulators have not yet decided which framing wins, and the answer will likely vary by state.
What this means if you’re buying capacity in PJM
None of this stops a deal from closing, but it changes what diligence should look like for anyone signing a long-term power or colocation agreement in PJM territory. Ask your utility or developer whether the project’s transmission costs carry a customer-paid flag in FERC Account 107 or PJM’s RTEP documentation, rather than taking “we’re handling the interconnection” at face value. Read any cost-recovery agreement for how revenue gets credited and to whom, since that is precisely the ambiguity Maryland is asking FERC to close. Treat zones with pending rate cases, show-cause responses, or large-load class proposals as having event risk on your power cost assumptions over the life of a 10-to-15-year contract, not just at signing. And weigh geography: a site in ERCOT or ISO-NE carries a materially different cost-allocation profile than one in PJM today, even before incentives and power prices are compared. The docket is moving quickly, and a ruling that reshapes who pays for the next wave of transmission could land before your project reaches commercial operation.
The fight over data center cost allocation is no longer background noise for utility lawyers — it is a live variable in the economics of any capacity deal in PJM, and buyers who track it now will negotiate from a stronger position than those who find out from a rate case filing. For a structured way to vet power, siting, and contract risk before you sign, start with the TechInfraHub Data Center Buyer’s Toolkit.
Written by
Raajeev Ratra
Data Center Infrastructure Expert | 15+ Years in DC Design, Operations & Project Management
Raajeev is a seasoned data center professional with hands-on experience in hyperscale facilities, colocation design, power & cooling infrastructure, and global DC operations. He shares practical insights to help engineers and IT leaders build better infrastructure.