Brad Viator is president of Power for Tomorrow, a nonprofit that provides research and commentary on the regulated electric utility model and how it protects consumers.
Federal Energy Regulatory Commission Chair Laura Swett opened the commission’s February meeting with a direct plea: she asked PJM to fix itself so that FERC wouldn’t have to intervene. She implored the troubled Mid-Atlantic grid operator to quickly file a proposal to fix the market’s mess.
The chair’s urgency is warranted. PJM is facing a crisis of its own design, and the solution is hiding in plain sight: in the regulated utility states thriving in many parts of the country.
The numbers tell a stark story. In 2024, PJM’s capacity auction prices skyrocketed from $28.92/MW-day to $269.92/MWd — a nearly-tenfold increase that translated to customer rate hikes across the region. The next year, prices jumped another 22%, increasing to $329.17/MWd. Most recently, the December 2025 capacity auction price increased yet again, hitting $333.44 and reaching the market’s imposed, but temporary price cap. Despite this, the auction fell 6.6 GW short of PJM’s reliability requirements — equivalent to powering all residential customers in Maryland for a year.
It’s easy to blame insatiable data center demand, but the real culprit is a market structure fundamentally incapable of dealing with demand growth. In competitive electricity markets like PJM, independent power producers face a perverse incentive when it comes to building new generation. If an IPP already owns power plants in PJM, why would they invest in new capacity that would lower wholesale prices and devalue their existing fleet? The answer is simple — they won't. And, as the numbers show: they aren’t. This is a PJM feature not a bug: The market actively discourages exactly the investment needed to meet surging demand. Existing generators have every reason to keep capacity tight and prices high.
At today’s Senate Environment and Natural Resources Committee hearing to examine the state of the bulk power system, the Electric Power Supply Association filed comments arguing for the continued value of markets with amorphous assertions about hedging and transferring risk from customers to developers. But, it is hard to see how customers are being protected when sky high capacity costs are hitting electricity bills and EPSA’s members are arguing that prices aren’t actually high enough for them to build new generation to meet growing demand. In fact, the real hedge against these prices is long-term utility investment in generation, overseen by regulators, who can scrutinize what is built and how much customers pay. The market cannot support decadal investment in long-term assets, but the utility model can — and does.
Recognizing this market failure, some PJM states are scrambling to address affordability and reliability by adding regulatory tools that vertically integrated utilities have used for decades. Maryland and Pennsylvania are exploring ways to exert more control over generation planning — essentially trying to retrofit regulatory oversight onto a competitive market that was supposed to supplant regulation as an antiquated construct.
Meanwhile, regulated utilities and their states are handling the exact same data center boom without the drama, the price spikes, or the policy chaos. In fact, residential customers are often doing better in these places.
For example, Georgia Power is operating under a three-year rate freeze while simultaneously adding 9,900 MW of new capacity for data centers. When that new capacity begins to come online in 2029, residential customers will begin to see their bills drop by about $100 annually. Georgia Power is absorbing massive new load, investing billions in infrastructure, and lowering residential rates at the same time. The utility’s integrated resource planning allows it to anticipate demand, build economically, and allocate costs fairly through transparent state regulatory proceedings.
Similarly, in Mississippi, after Amazon arrived, residential customers benefited from $300 million in grid resilience investments. Entergy met the data center load, made the system stronger for everyone, and allocated costs so existing customers weren’t subsidizing Big Tech’s electricity needs. State regulators ensured the cost allocation was fair, transparent, and protective of existing customers.
Entergy then extended this approach across its service area, announcing $5 billion in customer savings over the next 20 years because of datacenter investment in Arkansas, Louisiana, and Mississippi. They are calling their plan the Fair Share Plus plan.
Last month, Amazon announced another major project in Louisiana with American Electric Power. Existing customers will pay nothing for the infrastructure required to serve the new load. The state’s regulatory framework allows the utility and the commission to negotiate arrangements to protect customers — something that happens routinely in regulated states but remains nearly impossible in competitive markets.
Regulated utilities have the planning authority, cost allocation tools, and regulatory oversight to manage explosive load growth without destabilizing rates for existing customers. They can build new generation, upgrade transmission, and allocate costs transparently through state commission proceedings where ratepayer advocates, intervenors, and the public have a voice. Utilities have an obligation to serve and a regulatory mandate to plan for the long term — not just maximize short-term profits. Meanwhile, IPPs operating in competitive markets have neither the incentive nor the requirement to do the same.
Chair Swett is right to press PJM for solutions. But PJM doesn’t need to reinvent the wheel. It needs to look around and copy what’s working. And, in fact, PJM knows this. At last year’s FERC resource adequacy technical conference, Manu Asthana, former PJM president and CEO, underscored that PJM’s capacity market is not mandatory and that self-supply and bilateral contracting should be the main tools for developing capacity. He’s right. PJM is not designed for this. But, regulated utilities are. They are crushing it on data center integration while keeping residential customers whole.
The regulated states aren't waiting for PJM to figure it out. They’re already showing the way. The question is whether PJM and its stakeholders are willing to acknowledge that competition has failed when it comes to generation planning and cost allocation — and that giving utilities back the regulatory tools to plan, build, and fairly allocate costs just might be the answer.
