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Dow Jones NewsJan 16, 9:10 PM UTC
DJ Trump Pushes Plan for Tech Companies to Fund New Power Plants -- WSJ
By Amrith Ramkumar, Scott Patterson and Jennifer Hiller
WASHINGTON -- The Trump administration and a group of governors on Friday proposed that the nation's largest power grid operator hold an emergency auction in which tech companies would be forced to cover the costs of building new power plants.
The agreement would be an unprecedented attempt by the federal government to check rising electricity prices within PJM Interconnection, a 13-state power market spanning the area from New Jersey to Kentucky. The build-out of data centers there in response to the artificial-intelligence boom is straining the grid's capacity and has resulted in substantially higher costs in several of the grid operator's recent power auctions.
The emergency auction would have tech companies and other big customers that haven't built their own power pick up the bill for 15-year contracts for supply from new power plants. Deals would be worth at least $15 billion.
PJM, home to the largest concentration of data centers in the U.S., has come under strain in recent years as tech companies seek to connect even more of them to the grid. Power plants there have been going out of service faster than they can be replaced, which has put a squeeze on power supplies as more electricity-hungry facilities come online.
"Our directives will restore affordable and reliable electricity so American families thrive and America's manufacturing industries once again boom," Energy Secretary Chris Wright said. He blamed past price increases on the clean-energy policies of the Biden administration at a White House event featuring Democratic governors.
Shares of GE Vernova, a maker of gas turbines that could benefit from new demand, added more than 7%. Power generators, including NRG Energy, Vistra, Talen Energy and Constellation Energy, fell sharply. Part of the agreement included a two-year extension of a price cap in PJM's capacity auctions, paid to ensure generation assets will be available at times of peak demand on the system.
Earlier this week, Trump praised a pledge by Microsoft to pay its own way on data centers. He has publicly embraced the AI boom at a time when locals across the country have been pushing back on data centers over their effects on electricity costs, among other complaints.
A bipartisan group of governors, including Josh Shapiro of Pennsylvania, Mike DeWine of Ohio and Glenn Youngkin of Virginia were at the White House on Friday for a meeting with Wright and Interior Secretary Doug Burgum. All 13 governors represented by PJM have signed on to a "statement of principles," Shapiro said.
PJM intends Friday to release new rules meant to balance data-center needs with those of other customers.
Earlier efforts stalled in November when PJM couldn't agree on a plan with the tech companies, power suppliers, utilities and the independent monitor that oversees the market.
"We will work with our stakeholders to assess how the White House directive aligns with the board's decision," PJM said.
Bipartisan support for the effort highlighted the urgency of the data-center backlash ahead of the midterm elections, experts said.
"You have a marriage of two things: an enormously important public policy issue for the entire globe and a political imperative to get ahead of the affordability crisis in the U.S.," said Brad Carson, a former Democratic congressman representing Oklahoma who is now president of the think tank Americans for Responsible Innovation, which advocates for sensible guardrails around tech development.
PJM's most recent auction in December reached the price cap and fell short of its target for surplus power supplies, a result that analysts expect to continue.
While high auction prices are meant to be a signal to the market to build new power generation, that hasn't happened yet in PJM. Among many risks the market faces is that high auction prices could continue, creating higher customer bills, throughout the multiyear development timelines of power projects that would help relieve prices.
Through an auction process, PJM would offer 15-year offtake agreements that would help plant developers secure financing. Many owners of natural gas power plants have said a 10-year agreement would be needed to spur development.
"Data centers should embrace it. They will pay their fair share," said Neil Chatterjee, former chairman of the Federal Energy Regulatory Commission, which is known as FERC and oversees wholesale power in the U.S. The move "addresses affordability and helps solve for capacity. I suspect there will be close to unanimous support amongst Republican and Democrat governors."
Rob Gramlich of power sector consulting firm Grid Strategies said that changes to state or federal laws might be needed to fully implement the idea, but called it a "new and unique approach for a region that was stuck without good options."
The move is another effort by the administration to encourage data center operators to build their own generation. In October, Wright instructed FERC to draft new rules that would give it oversight of how giant data centers connect to the power grid. The process is typically overseen by states.
Across the country, regulators and utility officials are debating with tech companies how much they should have to pay for the massive infrastructure investments needed to support the number of data centers seeking to connect to the grid.
The idea that new data centers will need to adopt a "bring your own power" mantra has taken hold until grid infrastructure can catch up with the fast pace of data center construction.
Sen. Tom Cotton (R., Ark.) recently proposed a bill that would waive some federal requirements for power plants being built off the grid to serve data-center customers. Lawmakers have been pursuing permitting reform for years.
Write to Amrith Ramkumar at amrith.ramkumar@wsj.com, Scott Patterson at scott.patterson@wsj.com and Katherine Blunt at katherine.blunt@wsj.com
(END) Dow Jones Newswires
January 16, 2026 16:10 ET (21:10 GMT)
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