Connection Costs Loophole Costs Customers Over $4 Billion to Connect Data Centers to Power Grid

The Union of Concerned Scientists (UCS) reports that utilities in seven PJM states passed over $4.3 billion in data center connection costs to all customers in 2024. This occurs because large data centers (100–1,000 MW) require high-voltage transmission infrastructure, which falls under federal FERC jurisdiction and is typically allocated across all customers, unlike low-voltage distribution connections. UCS finds that in 95% of cases, these costs are not paid by the data center owners. The brief recommends that FERC and state PUCs require utilities to track and assign these specific costs to the customers causing them.

• In 2024, utilities across seven PJM states passed more than $4.3 billion in additional costs to all customers for local transmission upgrades required to provide direct service to data centers.
• Between 2022 and 2024, over 150 local transmission projects were initiated in Illinois, Maryland, New Jersey, Ohio, Pennsylvania, Virginia, and West Virginia specifically to connect data centers, costing consumers a total of $5 billion.
• A regulatory gap exists because transmission-level connections (above 69 kV) are supervised by the federal government (FERC), while distribution is supervised by states; this obscures cost causation and allows costs to be allocated broadly across all retail customers.
• The vast majority of data center connection projects are not paid for by the data center owners; in 2024, only 6 out of 130 projects (approximately 5%) were described as having no cost to other customers.
• Current utility reporting practices fail to distinguish data center connection costs from other transmission investments in FERC-supervised reports or state PUC filings, unless specific state legislation requires it.
• UCS recommends that FERC require transmission built for single customers to be paid for by those customers, and that both FERC and state PUCs mandate the tracking of these costs through rate-setting processes.

APA

Union of Concerned Scientists (2025). Connection Costs Loophole Costs Customers Over $4 Billion to Connect Data Centers to Power Grid. https://www.ucs.org/sites/default/files/2025-09/PJM%20Data%20Center%20Issue%20Brief%20-%20Sep%202025.pdf

Chicago

Union of Concerned Scientists. Connection Costs Loophole Costs Customers Over $4 Billion to Connect Data Centers to Power Grid. 2025. https://www.ucs.org/sites/default/files/2025-09/PJM%20Data%20Center%20Issue%20Brief%20-%20Sep%202025.pdf.

Wikipedia

{{cite report |author=Union of Concerned Scientists |title=Connection Costs Loophole Costs Customers Over $4 Billion to Connect Data Centers to Power Grid |date=September 2025 |url=https://www.ucs.org/sites/default/files/2025-09/PJM%20Data%20Center%20Issue%20Brief%20-%20Sep%202025.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{unionofconcernedscientists2025connection, author = {{Union of Concerned Scientists}}, title = {{Connection Costs Loophole Costs Customers Over \$4 Billion to Connect Data Centers to Power Grid}}, institution = {Union of Concerned Scientists}, year = {2025}, month = sep, url = {https://www.ucs.org/sites/default/files/2025-09/PJM%20Data%20Center%20Issue%20Brief%20-%20Sep%202025.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }