FERC Signals Tougher Hand Over PJM as Power Prices Surge

FERC Signals Tougher Hand Over PJM as Power Prices Surge A top federal regulator is threatening direct intervention in the US's largest grid as AI-driven demand overwhelms PJM's capacity queue. Federal Energy Regulatory Commissioner David LaCerte said on Monday (2026-06-01) that surging power prices across PJM Interconnection are pushing FERC toward greater direct authority over the grid operator — a significant shift in tone from a regulator that has historically deferred to regional operators on market design. LaCerte made the remarks on the POLITICO Energy podcast, framing the move as a response to demand growth that PJM's existing processes were not built to handle.⁵ PJM serves roughly 70 million people across 13 states stretching from the Midwest to the Atlantic Coast, making it the largest regional transmission organization in the country by load. When its power prices rise, they move costs for a customer base larger than most European nations. A federal crackdown, if it materialises, would have direct implications for how and how fast new generation connects to a grid already under strain.⁵ The pressure on PJM is not incidental. Data centers now account for roughly half of incremental US electricity demand growth, according to the IEA's global energy assessment — a structural shift that has overwhelmed interconnection queues designed for a slower-moving industry. Global data center electricity demand grew 17% in 2025, the IEA found, with AI-focused consumption rising even faster at 50%.¹ The interconnection queue itself has become a bottleneck of its own making. Of all capacity that submitted connection requests between 2000 and 2019, only 13% had reached commercial operations by the end of 2024, while 77% had been withdrawn, according to IEA data. The implication is a system where even projects that secure approval often fail to materialise, leaving demand growth to outpace supply additions.¹ Grid operators have separately been pushing back against federal timelines. Regional operators outside Texas requested extensions on FERC deadlines to upgrade transmission infrastructure — a request that signals the gap between what regulators want and what utilities can execute given current permitting and supply chain constraints.⁴ Into this environment came the announcement on Monday (2026-05-18) that NextEra Energy and Dominion Energy plan to merge in an all-stock deal valued at approximately $249 billion — the largest electricity transaction by far since AI demand became a dominant market force. The combined entity would own 110 gigawatts of generation across a range of sources and serve about 10 million utility customer accounts in Florida, Virginia, North Carolina and South Carolina.^2,3 The deal sits squarely in PJM territory. Dominion, with a market capitalisation of $54 billion before the announcement, is the dominant utility across Virginia and the Carolinas — states where data center load has been accelerating fastest. NextEra, at $195 billion market cap, brings renewables, battery storage and gas capacity at national scale. Analysts at Deloitte have noted that scale is becoming critical for utilities to compete for capital and execute at the pace AI demand requires.^3,2 The merger also proposes $2.25 billion in bill credits spread over two years for Dominion customers in Virginia, North Carolina and South Carolina — a mechanism designed to ease regulatory approval, given that consumer rate impact will be central to any FERC and state commission review.³ But consolidation alone does not resolve the interconnection problem. Scale helps utilities finance and build, but the queue bottleneck is a regulatory and process issue, not a balance-sheet one. The Constellation acquisition of Calpine, completed in January at $29 billion, expanded gas-fired capacity substantially; PJM power prices kept rising anyway.³ LaCerte's signals suggest FERC is weighing whether to use its existing authority more aggressively or seek additional tools from Congress — neither path is quick. A crackdown on PJM market design or interconnection timelines could reshape the economics of capacity auctions that set prices for hundreds of gigawatts of committed supply across the mid-Atlantic and Midwest. What traders should watch is whether FERC follows through with specific rule proposals or whether this remains a statement of intent. PJM's next capacity auction results, and the pace at which new generation — particularly gas peakers and storage — clears queue and reaches commercial operation, will determine whether prices ease or regulatory pressure intensifies further into the summer.^5,1