PSC warns exclusive power contracts for data centers could raise costs, strain reliability

Summary

The Maryland Public Service Commission told the state Senate Education, Energy, and the Environment Committee that exclusive contracts between large power generators and heavy electricity users — a configuration commissioners call "Type B" colocation — could reduce grid resource adequacy and raise costs for other customers if those generators are withheld from the PJM market.

The Maryland Public Service Commission cautioned the Education, Energy, and the Environment Committee on the risks of ‘‘Type B’’ colocation arrangements, in which a large electricity user (for example, a data center) enters an exclusive contract with a generator so the plant’s output is dedicated to that customer rather than offered into the PJM wholesale market.

"Our conclusion is that this arrangement does have the potential to have negative impacts on both resource adequacy for the grid and consequent impacts on cost for the other customers," Fred Hoover, chair of the Maryland Public Service Commission, told the committee. He said such contracts can subtract generation the region relies on while adding new demand.

The commission showed the committee technical analysis from PJM’s independent market monitor that assessed potential cost effects if generation were removed from the market. "The cost impact to Maryland ratepayers would be about a 47% increase in capacity costs and, on average, about a 71% increase in energy costs," Morris Shrem, a commission advisor, said summarizing…

PSC warns exclusive power contracts for data centers could raise costs, strain reliability

Summary

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