The politics of data center power in the mid-Atlantic changed on January 15, 2026. The National Energy Dominance Council, chaired by Interior Secretary Doug Burgum with Energy Secretary Chris Wright as vice chair, signed a Statement of Principles Regarding PJM with the governors of the states in the PJM Interconnection region. The next day, PJM's Board of Managers issued its own decisional letter on large load additions. Together, the two documents set the terms for the most consequential market redesign PJM has attempted in years.
The principles are short. Their message is not subtle: new data centers that do not bring their own supply should pay for the new power plants built to serve them, and households should be protected from the cost.
What the principles ask for
According to a summary by the law firm Latham & Watkins, the White House and governors called on PJM to hold a Reliability Backstop Auction to procure new capacity, starting no later than September 2026, and to give new resources that clear in it 15 years of price certainty. They asked PJM to file the tariff changes quickly, asserting that no additional stakeholder input was needed.
On cost, the principles say PJM should allocate the cost of capacity bought through the backstop to load-serving entities with new data centers that have not self-procured new capacity or agreed to be curtailable. Any remaining costs would go to load-serving entities based on their remaining net short positions. Because how utilities pass costs on to customers is a matter of state law, the governors agreed to use "all available authorities" to ensure their utility commissions design rate classes that assign the cost to new data center loads and protect residential customers.
The principles also asked PJM to extend the capacity price collar, which set a floor and cap for the 2026/2027 and 2027/2028 auctions, to the next two auctions at the current level. And they asked PJM to forecast only large loads that show a meaningful, verifiable commitment, such as an executed energy service agreement or credit support, so that capacity is bought only for real demand.
The board's answer
PJM's Board agreed on the direction but not on every detail. It directed staff to accelerate and execute a backstop procurement, but said the existing backstop rules in the tariff were not detailed enough and that design would need stakeholder discussion. It directed staff to address cost allocation, including mechanisms that assign costs to load-serving entities that are short because of load growth in their areas.
On the price collar, the Board was more cautious. It recognized that a collar may obscure the market's true clearing price and dampen the signals needed for new supply, and it noted "legitimate questions" about whether the capacity market alone is sufficient to bring forward new resources. It asked stakeholders for feedback by January 30 before deciding whether to file.
The Board proposed defining large load additions as individual additions of 50 MW or more at a single point of interconnection, and directed staff to implement forecasting reforms including state review of large load requests, measures against duplicate requests and more third-party review. Both documents also emphasized the need to speed up interconnection studies for new generation, particularly plants developed to serve new large loads, since the queue remains the main bottleneck between a signed contract and a working power plant.
Why it happened now
PJM's most recent auction, for the 2027/2028 delivery year, cleared 5.6% below the target reserve margin, according to Latham & Watkins, the first time the market had failed to procure enough capacity. Under the tariff, PJM may seek approval for a backstop procurement after a run of deficient auctions, but the White House and governors wanted it sooner.
The National Governors Association described the backdrop in its own commentary: recent capacity auctions in the mid-Atlantic had hit record highs, "driven in large part by demand from data centers," and governors were concerned that the cost of supplying data centers would be "shouldered by consumers." It cited Lawrence Berkeley National Laboratory's forecast that data centers could reach between 6.7% and 12.0% of total US electricity demand by 2028, from 4.4% in 2023.
The 13 states involved, Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia and West Virginia, span both parties. The principles gave governors a federal partner in pushing PJM.
What it means for data centers
For data center developers, the principles change the calculation in three ways.
First, bringing capacity becomes the cheaper option. A data center that signs a contract with a new generator, or agrees to be curtailed during emergencies, would avoid backstop charges. That creates a market for bilateral deals between hyperscalers and plant developers.
Second, flexibility becomes valuable. The option to be curtailable gives operators a way to connect without paying for firm capacity, if their workloads can tolerate interruptions.
Third, forecasting reform raises the bar for speculative requests. Projects without signed service agreements or collateral would no longer count in PJM's load forecast, which reduces the capacity PJM buys on their behalf, but also means they have no claim on it.
What to watch
The first test is the stakeholder process the Board launched. Stakeholders had until January 30 to respond on the price collar, and PJM staff must turn the Board's direction on the backstop into tariff language that FERC can approve. The principles asked for an auction to begin no later than September 2026, which leaves little time for the usual PJM process of committee votes and filings.
The second test is cost allocation. Assigning backstop costs to utilities with new data centers sounds simple, but it requires deciding which load counts as new, how to treat data centers already under contract, and what happens if forecast load never arrives. Those choices will determine whether the cost lands on data centers in practice or spreads back to other customers.
The third test is the states. The governors' promise to direct their utility commissions toward data center rate classes will need separate proceedings in each state, and the results will vary.