US President Donald Trump has reached an agreement with governors from several northeastern states to advance an emergency wholesale electricity auction, compelling technology companies to fund the construction of new power plants.
This unprecedented plan, scheduled for announcement on Friday morning, aims to resolve the escalating conflict—the US must power energy-intensive data centers (seen as crucial for winning the global AI race) while avoiding increased electricity bills for households and businesses.
The Trump administration and participating governors plan to direct grid operator PJM Interconnection LLC to conduct an auction where tech firms can bid for 15-year contracts for new power generation capacity.
If the auction proceeds as expected, tech giants will be required to pay for the electricity throughout the contract term, regardless of actual usage. This move would provide a stable revenue source for a market known for volatile prices and frequent power plant bankruptcies.
An unnamed White House official revealed that the auction would support contracts for new power plant projects totaling approximately $15 billion.
However, representatives from PJM will not attend Friday's plan announcement.
PJM spokesperson Jeffrey Shields stated via email: "We don't have much to say on this at the moment. We were not invited to the event they are apparently holding tomorrow and will not be attending."
The White House has not yet responded to requests for comment.
The Trump administration and governors will advance this initiative by signing a non-binding "statement of principles," with signatories including Trump's National Energy Leadership Committee and governors from Pennsylvania, Ohio, Virginia, and other states. This action addresses concerns about electricity demand growth far outpacing supply in PJM's operational area.
The grid operator supplies power to over 67 million people across the Mid-Atlantic to Midwest US regions. Northern Virginia, part of the PJM grid, is already the world's most concentrated area for data centers. PJM forecasts its system's peak load will increase by 17% from this year's high by 2030.
Trump has repeatedly mentioned building power plants near data centers, and on Monday he intensified this stance, posting on social media that large tech companies constructing data centers must "pay their own costs."
Trump wrote in the post: "I will not allow American families to pay higher electric bills because of data centers."
The cost of living has become a significant constraint for Republicans aiming to maintain control of both houses of Congress in November's elections. Although Trump emphasizes that oil and gasoline prices have fallen sharply since he took office in January last year, electricity prices continue to rise due to increasing demand, and the data centers driving these price hikes are facing growing opposition.
Data from the National Energy Assistance Directors Association shows that in September 2025, the average US residential electricity retail price rose 7.4% year-over-year to a record high of 18.07 cents per kilowatt-hour, the largest increase since December 2023. From January to August 2025, residential electricity prices surged 10.5%, one of the largest increases in over a decade.
With electricity prices soaring in the Mid-Atlantic US, this measure is characterized as a necessary one-time emergency intervention in the PJM market. The White House official stated that once this urgent issue is resolved, the administration and governors will urge the grid operator to return to market fundamentals.
The "prescription" proposed by the US government for the PJM grid is a "reliability assurance auction"—in fact, PJM had previously considered such auctions after multiple auction failures. However, the administration and governors' plan means initiating this emergency auction immediately after a clear auction failure, with terms different from usual, aimed at spurring a rapid wave of new power plant construction, with bidding limited to data center owners and operators.
PJM's previous electricity supply auctions had contract terms of only 12 months. In the 15-year contract auction promoted by Trump and the governors, the commissioning times for new power plants may be staggered. The White House and governors are urging PJM to complete this special one-time auction by the end of September this year.
Joe Bowring, President of Monitoring Analytics, PJM's independent market monitor, said in a phone interview: "This sounds like a significant improvement and a logical extension of the 'self-supply new generation capacity' model."
Timothy Fox, an analyst at clean energy research firm ClearView Energy Partners, noted: "Although the 'statement of principles' does not appear to grant PJM legal authority to act, pressure from the Trump administration and a bipartisan coalition of states within PJM's footprint is highly likely to prompt a positive response from the grid operator."
The plan could also accelerate the construction of natural gas power plants by guaranteeing revenue and profits, and potentially even promote nuclear power plant development, specifically to support data center campuses required for AI deployment.
However, this model might benefit large tech companies at the expense of small and medium-sized enterprises.
DA Davidson analyst Gil Luria stated that giants like Amazon, Alphabet (Google's parent company), and Microsoft are relatively less affected by electricity price fluctuations because they can pass costs on to consumers. But dozens of small and medium-sized companies, including Nebius and CoreWeave, which provide AI infrastructure services to cloud computing companies under multi-year contracts, are more vulnerable to significant electricity price swings as they must absorb the increased costs themselves.
Luria said: "If they have to pay higher electricity bills, their profit margins will be squeezed."
This initiative could help PJM tackle a major challenge: improving the accuracy of demand growth forecasts. Under the model where tech giants pay for their required power plants, speculative projects that distort demand growth predictions would be eliminated.
The White House official noted that the participation of Democratic governors like Pennsylvania Governor Josh Shapiro and Maryland Governor Wes Moore is seen by the Trump administration as crucial for stabilizing this measure—after all, recent adjustments to the US energy mix, including the phased retirement of coal and natural gas plants, have been driven by state policies. The official also stated that the plan could benefit hyperscale data center operators by ensuring reliable power supply and might serve as a model for other regions across the US.
The White House official pointed out that state governors have committed to implementing relevant measures and allocating costs to data centers, ensuring that the costs of new power plants are not passed on to ordinary household users.
Since PJM's auction prices hit record highs in 2024, its auctions have become a political focal point in the national cost-of-living debate. Although Pennsylvania Governor Shapiro previously reached an agreement with PJM to set price caps for subsequent auctions, prices in the two auctions since then have broken new highs.
The latest auction held last December saw a power supply shortfall of 6,600 megawatts, which PJM attributed to the clustering boom of large-scale data centers.
The White House official revealed that PJM is currently required to extend the price cap policy to all auctions held this year.
The official stated that although the "statement of principles" to be signed on Friday is not legally binding, government officials have consulted with various stakeholders on the plan, including PJM executives, state officials, utility companies, power plant developers, Wall Street institutions, and hyperscale data center operators currently building data centers.
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