A crew from Telecon Services work on installation of innerduct for fiber optic cable near the Quantum Loophole site in Adamstown.
Out of that estimated $5.1 billion cost, about $2.6 billion would go toward projects in Virginia — $1.4 billion of which is specifically allocated for grid upgrades to accommodate data center power demands in Northern Virginia. These upgrades include building multiple new high-voltage power lines.
PJM Interconnection, which operates the regional power grid across multiple states, has predicted a significant impact to its regional grid from additional power demands from up to 7,500 megawatts of new data centers to be sited in Virginia and Maryland, as well as the deactivation of 11,000 megawatts of power generation across the grid, according to the company.
FERC regulates the interstate transmission of electricity, natural gas, and oil, according to its website.
“[T]his huge transmission buildout is driven primarily by the anticipated addition of massive new electric needs associated with the construction of data centers in Northern Virginia,” the OPC wrote. “Should actual loads fall short of PJM’s projections, Maryland ratepayers may be on the hook to pay for an expensive portfolio of projects that, in reality, were not needed.”
In its filing, the OPC said companies delivering power to Maryland through PJM’s grid, such as Allegheny Power Systems, Baltimore Gas and Electric Co. and Potomac Electric Power Co., have been allocated high costs relative to their peak power loads despite not having proportionately high benefits from the projects.
“What we are trying to do is make sure that there’s a general principle in utility rate setting that the parties responsible for imposing costs on the system should bear those costs,” said People’s Counsel David Lapp. “We’re not saying Maryland ratepayers shouldn’t pay anything. We’re asking for essentially a better assessment of who’s benefiting from this transmission and therefore who should pay.”
PJM spokesperson Jeff Shields wrote in an email on Tuesday that the company followed its FERC-approved planning process and FERC-approved cost allocation methodologies.
“Maryland’s electricity consumers will benefits from this transmission buildout; it is designed to solve not only for new demand entering the system, but also for generation retirements in the PJM footprint, including retirements in Maryland,” Shields wrote.
FERC spokesperson Celeste Miller said the agency could not comment on the proposal or the OPC’s filing as it is a pending proceeding.
Quantum Loophole plans to build a campus of data centers on the former site of the Alcoa Eastalco aluminum smelting plant near Adamstown and has begun building infrastructure and installing fiber optic cables.
The campus will be connected to the “data center alley” in Virginia’s Loudoun County, which contains 31 million square feet of data centers, by a 40-mile-long fiber optic ring.
Multiple residents and organizations have expressed concerns about the possible consequences of data centers on Frederick County, including energy and water consumption, economic impacts, noise and pollution. People also were concerned that data centers’ power usage could drive up electrical transmission rates for other residents.
In June, County Executive Jessica Fitzwater created a data center work group to prepare a report with recommendations for the Frederick County Council on regulating data centers.
The work group held meetings from August to January and spoke to various industry stakeholders, including officials from Loudoun County in Virginia; residents in Virginia living near data centers; power and water engineering experts; and environmental advocates.
The work group heard from David Kline, manager of external affairs for FirstEnergy, about how Potomac Edison, a subsidiary of FirstEnergy, will provide power to Quantum Loophole’s campus and how other ratepayers could be affected.
Potomac Edison provides power to more than 400,000 customers in Maryland and West Virginia, according to the company’s website, and goes through the power grid operated by PJM.
Kline said Potomac Edison does not generate power and is responsible for actually delivering the power. He said Quantum Loophole will pay for the transmission lines and equipment that will solely serve its campus, and other customers’ electric distribution rates will not increase because of the construction.
However, any regional transmission upgrades would be paid through transmission rates, he said.
Steve Kearney, a spokesperson for Quantum Loophole, said the company has no comment on PJM’s proposal or the OPC’s filing.
The OPC’s filing stated that because of Maryland’s proximity to Virginia, Maryland ratepayers would shoulder a “disproportionate and burdensome share of the cost allocation” despite not experiencing the same projected power load growth and the benefits of the data centers.
The filing also alleges that PJM’s proposal violates the Federal Power Act and that PJM has not proven its proposed rates are reasonable and just.
“Since many of the … Projects are being built specifically to accommodate future load growth in Northern Virginia due to data center development, the … costs should similarly use that future load to allocate costs,” the OPC wrote. “[C]ontinuing with the current … load allocation methodology … would cause non-Virginia ratepayers to pay an excess share … that is not commensurate with the benefits received once the projects are completed.”
County Councilmember Renee Knapp, one of the data center work group co-chairs, said the regional power demand of data centers is not the only factor that plays into the grid upgrades.
“County residents shouldn’t have to pay a disproportionate share of the proposed upgrades for what they are receiving,” Knapp wrote in an email on Tuesday. “[T]here are also plans to accommodate older facility retirements, address future capacity needs related to electrification, and increase inter-regional power reliability.”
Fitzwater could not be reached for comment on Tuesday.
“We will be monitoring PJM’s proposal closely, as we do with any potential decision by state and federal regulators that could affect people who live and work in Frederick County,” Victoria Venable, the county executive’s director of government relations and strategic partnerships, said in a statement on Tuesday.