MW Time is running out to avoid a power crunch in America: 'The current situation is not tenable'
By Claudia Assis
A grid operator warns that it has mere years, not decades, to act if it is to sidestep shortages
PJM, a nonprofit grid operator, stopped short of making specific reform recommendations to avoid a power crunch.
The biggest grid operator in the U.S. has called for a major overhaul as it balances surging power demand from data centers against worries about high residential electricity costs and the risk of shortages.
"The current situation is not tenable," PJM CEO David Mills said in a Wednesday letter to stakeholders accompanying a new report. "The region has years, not decades, to make these choices deliberately."
PJM, a nonprofit grid operator, stopped short of making specific reform recommendations to avoid a power crunch. Instead, PJM chose to offer three possible pathways for reforms to be discussed by stakeholders - state and federal governments, consumers and the like.
Analysts aren't entirely clear which path would make the most sense for independent power producers such as Constellation Energy (CEG), Talen Energy $(TLN)$ and Vistra (VST). Timelines were also unclear.
"Devil is in the details with each of the proposals," Citi analyst Ryan Levine said in a note. And none of the proposals would be immediately ready for implementation, which is also concerning, Levine said.
"PJM indicated it still has years to figure this out. We worry that the continued back and forth is leading PJM to miss the opportunity. The load will just move to other regions around the world if it really takes years to figure things out," he said.
PJM opened up the process with the ultimate goal of sustainably attracting new power generation supply - the creation of new power plants - while reducing the capacity price burden on residential customers, said Jefferies analyst Julien Dumoulin-Smith.
"We view PJM capacity market reforms as more of a risk vs. opportunity for IPPs," Dumoulin-Smith wrote.
PJM is a regional transmission organization, or RTO, coordinating wholesale electricity markets in all or parts of 13 states and the District of Columbia. It serves independent power producers as well as regulated utilities.
In essence, it acts as an air-traffic controller for the power grid, ensuring behind the scenes that the lights stay on for about 65 million people, or about 20% of the U.S. population. There are other grid operators covering U.S. regions or populous states such as California and New York.
Data centers have been a boon for the U.S. economy, but that's set up a collision with one of President Donald Trump's most dearly held goals - keeping energy bills lower as he tries to convince Americans that the economy is in good shape ahead of midterm elections .
That political conundrum only grew murkier with the war in Iran boosting retail gasoline prices and stoking further concerns about inflation and a weaker economy.
Consultants at McKinsey last year projected that data centers would require a staggering $6.7 trillion globally by 2030 to keep pace with the demand for computing power, including $5.2 trillion in capital expenditures for data centers handling AI processing loads.
-Claudia Assis
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May 07, 2026 15:24 ET (19:24 GMT)
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