FERC Chair Warns PJM of Governance and Capacity Crisis Amid Data Center Boom

At PJM Interconnection’s annual meeting in Baltimore, Federal Energy Regulatory Commission Chair Laura Swett warned that the largest grid operator may have “grown too big to function.” She said confidence in PJM’s decision-making has “completely eroded,” describing a “serious legitimacy crisis” as the operator scrambles to add generation for data centers. Swett urged “history-making decisions” that could “make or break part of a nation.”

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PJM runs wholesale power markets and transmission across 13 states and the District of Columbia. A December capacity auction missed the reserve-margin target, prompting FERC warnings. Forecasts have surged as developers cluster data centers—especially in Northern Virginia’s “data center alley”—to support AI goals. PJM added 4.8 GW of capacity in 2024 and plans 2.8 GW in 2025; by January, 8.2 GW was under construction with an additional 3.2 GW partly in service. The organization now includes more than 1,000 participants, versus 535 members of Congress.

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Swett announced a July 23 conference to examine PJM’s stakeholder process and propose reforms. PJM spokesperson Jeffrey Shields said the company “looks forward to participating” and will continue “advancing the reliability backstop auction efforts to bring new generation online as quickly as possible.” Glen Thomas, president of the PJM Power Providers Group (P3), acknowledged “room for improvement” while rejecting the claim that the process is fundamentally broken. Kent Chandler, senior fellow at the R Street Institute, described PJM’s governance as “broken” but warned reforms must not enable entrenched interests to expand further. State governors have voiced “heavy criticism” that the cost burden of new data centers falls disproportionately on ratepayers, and Chandler questioned why governance is prioritized over load forecasting, generation interconnection, and market efficiency.

UtilityDiveBloomberg

• “perhaps simply has grown too big to function,” — Laura Swett, FERC Chair

Bloomberg

• “The current stakeholder process is slow where it must be fast, opaque where it must be transparent and vulnerable to vetoes and agenda control exactly when the region needs immediate action,” — Laura Swett, FERC Chair

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• “We simply cannot have a market that falls short at exactly the time when we must successfully navigate this once-in-a-generation opportunity to cement America’s energy leadership.” — Laura Swett, FERC Chair

Bloomberg

• “, and former member of the Kentucky Public Service Commission, said governance is “broken” in PJM, but he cautioned that FERC must be careful that entrenched interests are not allowed to further expand their control.” — Kent Chandler, R Street Institute

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The July 23 conference will bring regulators, stakeholders, and representatives together to identify governance flaws and outline actionable reforms that could reshape capacity-auction designs, stakeholder procedures, and the strategy for integrating data-center load into the nation’s power system.

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