“Emergency Intervention”: Trump To Cap Residential Electric Bills By Forcing Tech Giants To Pay For Soaring Power Costs

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Back in August, when the American population was just waking up to the dire consequences the exponentially growing army of data centers spawned across the country was having on residential electricity bills, we said that the chart of US CPI would soon become the most popular (not in a good way) chart in the financial realm.

One month later we added that it was only a matter of time before Trump, realizing that soaring electricity costs would almost certainly cost Republicans the midterms, would enforce price caps.

Turns out we were right.

And while Trump obviously can not pull a communist rabbit out of his hat, and centrally plan the entire US power grid, what he can do is precisely what he is about to announce. 

According to Bloomberg, Trump and the governors of several US Northeastern states agreed to push for an emergency wholesale electricity auction that would compel technology companies to effectively fund new power plants, effectively putting a cap for residential power prices at the expense of hyperscalers and data centers. Which, come to think of it, we also proposed back in October.

The unprecedented plan, set to be announced Friday morning, seeks to address growing tensions over how the nation can supply electricity to power-hungry data centers, critical to help win the global AI race against China, without simultaneously hiking utility bills for homes and businesses.

The Trump administration and some US governors plan to direct grid operator PJM Interconnection LLC, the largest regional power grid in the US serving 67 million customers primarily in the Northeast, to hold an auction for tech companies to bid on 15-year contracts for new electricity generation capacity.

If the auction proceeds as envisaged, tech giants would pay for power over the duration of the contracts, whether they use the electricity or not, providing secure revenues for years in a market notorious for price volatility and generator bankruptcies.

The auction would deliver contracts supporting the construction of some $15 billion worth of new power plants, said a White House official granted anonymity to detail the approach. 

Naturally, since this plan is being introduced under duress, representatives of PJM won’t be in attendance when the plan is laid out Friday according to Bloomberg. 

“We don’t have a lot to say on this,” PJM spokesman Jeffrey Shields said by email. “We were not invited to the event they are apparently having tomorrow and we will not be there.”

The push by the administration and the governors — which will come in the form of a non-binding “statement of principles” signed by Trump’s National Energy Dominance Council and the governors of Pennsylvania, Ohio, Virginia and other states — responds to growing concern about power demand far outpacing supply in the region managed by PJM.

PJM is already home to the world’s biggest concentration of data centers, in northern Virginia. It expects peak demand across its system to jump 17% by 2030 from this year’s high. Furthermore, as we noted two months ago, PJM is one of the 8 (out of 13) regional power markets that are already below critical spare capacity levels.

Trump has repeatedly described power plants being built alongside data centers, and on Monday, he doubled down on the idea, insisting in a social media post that the big technology companies that construct data centers must “pay their own way.”

“I never want Americans to pay higher Electricity bills because of Data Centers,” Trump wrote in his post, and now he will try to make that a reality.

As we have warned repeatedly in the past year, cost-of-living concerns – especially when it comes to staples like electricity – are already weighing heavily on Republicans’ bid to maintain control of the House and Senate in this November’s congressional elections. While Trump has stressed the plummeting cost of oil and gasoline since he took office last January, electricity prices have climbed due to rising demand, and there’s a building backlash against data centers that are fueling the surge… which – you guessed it – we warned about too.

The average US retail price for electricity gained 7.4% in September to a record 18.07 cents per kilowatt-hour, the biggest gain since December 2023. Residential prices have jumped even higher, rising by 10.5% between January and August 2025, marking one of the largest increases in more than a decade, according to the National Energy Assistance Directors Association.

Friday’s action is being cast as a one-time emergency intervention into the PJM market, necessary because of the rapid rise in electricity prices in the Mid-Atlantic region. The Trump administration and governors will urge the grid operator to return to market fundamentals after the acute problem is addressed, the White House official said.

The administration’s prescription for PJM is what’s known as a reliability backstop auction — something the grid operator already envisioned in the wake of repeated failed sales. But the administration and governors’ plan would mean holding the emergency auction right away after one clear failure – with unusual terms meant to foster a wave of rapid, new construction and the only bidders being data center owners and operators.

While PJM already holds auctions procuring electricity supplies, those are 12-month periods. In the auction encouraged by Trump and the governors for 15-year contracts, start-up times for the new power plants are likely to be staggered. The White House and governors are urging PJM to hold the special one-time auction by the end of September.

“It sounds like a significant improvement and a logical extension of bring-your-own new generation,” Joe Bowring, president of PJM’ s independent watchdog Monitoring Analytics LLC, said in a telephone interview. Almost as if the Trump admin read something else we wrote…

“While a ‘statement of principles’ doesn’t appear to include a legal mandate for PJM to act, pressure from the Trump administration and a bipartisan coalition of PJM states is very likely to motivate a considerable response” from the grid operator, said Timothy Fox, an analyst with the research firm ClearView Energy Partners.

This plan also could fast track the development of natural gas generation and potentially nuclear plants by guaranteeing revenues – and profits – specifically to support data campuses needed to deploy artificial intelligence. The approach could benefit larger tech companies at the expense of smaller firms, as well as companies involved in advanced energy development such as Small and Modular Nuclear Reactors. 

Amazon.com Inc., Alphabet Inc.’s Google and Microsoft Corp. are less exposed to electricity price fluctuations since they can pass those costs on to customers, said Gil Luria, analyst at DA Davidson & Co. However, dozens of smaller companies, including Nebius and CoreWeave that offer artificial intelligence infrastructure to cloud-computing companies on multi-year contracts, could be more exposed to big price swings since they are on the hook to absorb higher electricity costs, he said.

“If they have to pay more for electricity, their margins will get squeezed,” Luria said.

Trump’s initiative will deliver another benefit: the effort has the potential to help PJM tackle a significant roadblock: improving the accuracy of its forecasts for demand growth. With tech giants paying for the power plants they need, the approach could weed out speculative projects that have skewed demand growth projections, something we discussed earlier.

As Bloomberg notes, the involvement of Democratic governors – including Pennsylvania’s Josh Shapiro and Maryland’s Wes Moore – is seen by the Trump administration as helping to anchor the effort, since state policies have driven recent changes in the power mix, including the retirement of coal and gas plants. The initiative is also seen aiding hyperscalers by ensuring reliable power supply, and it could be a model for other parts of the country, the White House official said.

Governors are committing to implement and assign these costs to the data centers, ensuring the price of these new power plants doesn’t land on the average household, the White House official said.

PJM’s auctions have emerged as a political flashpoint in the national debate about affordability after prices reached record levels in 2024. Although Pennsylvania’s Shapiro struck a deal with PJM to cap prices in future auctions, costs hit new highs in two subsequent sales. In fact, had it not been for an implicit cap in the latest auction, residential prices would have been 60% higher (see “Inside The PJM Auction Report, Something Crazy: Without Price Controls, Electricity Bills Would Explode”.) 

The most recent auction, in December, also fell 6.6 gigawatts short of supplies, which PJM blamed on the frenzy to build massive data centers. PJM is now being asked to extend the price cap for auctions held through this year, the White House official said.

While the statement of principles being signed Friday isn’t a binding legal document, administration officials have discussed the plan with a host of stakeholders, from PJM executives and state officials, to utilities, power-plant developers, Wall Street and the hyperscalers building these data centers, the official said.

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