Ep. 026 - PJM's $12B Modeling Mistake Is Hitting Ratepayers Again (Datacenter, Energy)

Summary

Robert Boswell explains how PJM's capacity auction design and demand modeling errors caused $12 billion in avoidable ratepayer costs across the 2025-26 and 2026-27 auctions, and warns the upcoming emergency auction could repeat the mistake. The discussion covers constrained supply, winterization modeling, data center demand, and governance conflicts. The main market implications are that incumbent generators benefit from scarcity pricing while battery storage represents a large efficiency opportunity.

• PJM spans 13 states and 66 million people, making it the largest US grid by electricity delivered.
• Four PJM capacity auctions spent $63 billion, of which $12 billion was avoidable from bad modeling.
• PJM uses summer power plant ratings year-round and ignores winterization gains, causing overbuying.
• Supply is constrained by short auction lead times and slow interconnection queues.
• The upcoming emergency auction may contract 6.8 GW, but better modeling suggests only about 3 GW is needed.
• Data center load is blamed for rate increases, but Boswell argues auction design is the larger driver and data centers could lower costs with scale.
• Existing generators are receiving windfalls from scarcity pricing.
• Battery storage and better localized grid planning are named as large opportunities to reduce electricity costs.