By Lauren Jessop | The Center Square contributor
The Center Square

(The Center Square) – As the country braces for a surge in electricity demand driven by large energy users like data centers, two questions lie at the center of the debate over the grid’s future: can it remain reliable and who will pay for it?

Utility experts warn that rising load forecasts are colliding with projected supply shortfalls. And, while PJM works to finalize new rules for connecting large load customers to the grid, some state officials, consumer advocates, and industry groups are zeroing in on the affordability piece of the puzzle.

Accurate load forecasting is essential in meeting rising demand without wasting capital on infrastructure that may never be used, and it affects everything – from keeping the lights on to the prices customers pay each month.

“Ghost projects” are a big part of the issues that are creating uncertainty, Todd Snitchler, president and CEO of the Electric Power Supply Association, or EPSA, told The Center Square.

A ghost project is a generation or transmission project that is announced or funded but never gets built.

Snitchler said gigawatts of new demand are being reported to the system, but there are duplications. Data center developers and hyperscalers routinely scout multiple locations at once, so the same potential project gets counted several times, artificially inflating the load forecast – leading to the risk of overbuilding, stranded costs, or unnecessary spending.

According to Snitchler, there are utilities pointing to these numbers to justify getting back into the business of rate-based generation, claiming they can deliver new plants faster and more cheaply, and with no impact on customers.

None of this can be true, he added, “because they’re subject to the same pressures we are as independent power producers.” And under their business model, they recover their costs plus a reasonable rate of return through a non-bypassable charge paid by customers.

Some states, he said, are tightening their tariffs to include only credible, large-load projects in forecasts. When AEP Ohio applied its new tariff, its projected growth over five years dropped from 30 GW to 13 GW – a 60% reduction. The former is equivalent to powering 26 million homes, while the latter is enough for 1.1 million.

“That suggests to me,” he said, “they can’t be alone in experiencing that.”

He noted that the load forecast for most Pennsylvania utilities was surprisingly flat, with others having only 1-1.5% annual growth, while PPL’s amounted to a 200% increase over 10 years. Something he says is wildly out of step with their peer utilities and raises questions about how thoroughly they are vetting projects, and how many are real.

He argued that overstated demand forecasts suggest developers need to build like crazy, justifying the utilities’ preference to get back into the rate-based generation business – and forcing customers to pay for new power plants instead of relying on the competitive market.

In these cases, Snitchler questions whether the projects are real, or simply advocacy tools designed to help publicly traded utilities grow their rate base and boost shareholder returns, as opposed to competitive developers who invest their own capital and bear the risk themselves.

His concern is that in addition to not having the best answer, there’s an incentive to have the wrong answer, because that helps advance policy objectives that may be better for some organizations, but are intentionally harmful to others.

The bottom line, EPSA says, is that realistic, data-driven planning ensures reliability for the 67 million customers in the PJM region. The solution to meeting demand is continued investment through competitive electricity markets in new and existing power generation, guided by disciplined, transparent forecasting that reflects the projects most likely to materialize.

“There is no silver bullet for this – and I’m not even convinced there’s silver buckshot. Because there’s so much happening that needs coordination for us to deliver and do our best, to ensure a reliable, affordable, and growing system,” Snitchler said. “I think everyone is aiming in the right direction, and we’d do a little better if we bickered less and cooperated more. But it doesn’t feel like where we are at the moment.”

“PJM is doing everything within our authority to reform our processes so they reflect load growth that is likely to occur, not just speculative activity,” Jeffrey Shields, PJM spokesperson, told The Center Square via email.

He said the potential for duplicative requests is one issue they are addressing with their stakeholders in the Critical Information Fast Path process for Large Load Additions, which will conclude on Nov. 19 with a recommendation to the PJM Board of Managers. The CIFP process was initiated by the Board in August to explore ways to continue to connect large loads to the system quickly and reliably without risking electricity shortages.

As part of the CIFP discussions, they are recommending several improvements to the load forecasting process, building on existing enhancements that incorporate large load adjustments into the long-term forecast. They have also standardized the system that load-serving entities use to request large load additions, to include evidence of binding commitments that facilities will be built.

PJM has also recommended a specific review process involving the states and utilities that operate within their borders; those states and their utilities also have authority to set rates and require commitments from data centers and other “large load” customers.

A summary of their proposal to deal with the issue will be considered along with 11 others.