Week 34: Your Bill Pays Their Boom

MaxOkay, quick claim before we even say hello. Your electricity bill went up last month, and you didn't plug in a single new thing. Someone else did. Guy in Manassas, Virginia, opens his bill and about falls out of his chair. Tripled. No new appliances, no space heater, nothing. Somewhere in Virginia, a data center just got a lot hungrier. Exactly. Welcome to The Common Thread. I'm Max. And I'm Blake. This week's thread is basically who pays when demand for power explodes and nobody voted on it. We're gonna trace that Manassas bill all the way up to a wholesale power auction that jumped tenfold in a single year. Then into Washington. A March pledge that names the problem, but walk me through the math on that, has zero enforcement behind it. And then the states go wild. Hundreds of bills, moratoriums, a fifteen-bill fight in Virginia alone. I wanna know if a moratorium is a real policy fix or just neighbors with better lawyers. Same question we're asking, and it lands us on whether an executive order can even override any of that. Big week, bigger bills. Painfully bigger. Let's start with the guy in Manassas. Quick, uh, check. Did you buy a new fridge, a hot tub, crank the AC to arctic levels? Nope. Then why does your power bill just about triple? That's interesting. John Steinbach's lived in his Manassas, Virginia, house almost forty years. TechTimes reported his January bill hit two hundred and eighty-one dollars. Wow. Roughly triple what he normally pays. He changed nothing. Okay. Walk me through why that's a data center problem. Could just be a cold January. Fair enough. IEEEFA's read on the PJM auction results shows capacity prices, basically what utilities pay to guarantee powers on standby, jumped from twenty-eight ninety-two per megawatt day to three hundred and twenty-nine seventeen. Ten times higher. And nobody voted on that. Nope. It's baked into the rate structure. That's the frame for this whole week. Who eats the cost of somebody else's industry? Right. Not a red state, blue state thing. I'm Max. I'm Blake. And we're chasing who actually authorized handing you that bill. Somebody plugged something in- Mm-hmm. And it wasn't Steinbach's freezer. So who was it, and why is it landing on his statement instead of theirs? Building on that jump, the mechanism itself matters. A capacity auction isn't paying for power you use today. It's PJM buying insurance three years out that enough generation exists when demand peaks. So it's like pre-ordering tickets for a concert that hasn't been booked yet. Close. PJM hands the market a forecast for, say, twenty twenty-eight. Generators bid to cover it, and whoever clears sets the price for every single megawatt sold that year, not just the new stuff. And PJM's own twenty twenty-six long-term forecast- Mm-hmm. Has thirty-two gigawatts of new peak demand coming by twenty thirty. Most of that tied to data centers. And Monitoring Analytics, that's PJM's own independent market monitor, found data center load drove sixty-three percent of this year's capacity price increase. Call it nine point three billion dollars passed straight to customers. Nine point three billion dollars for infrastructure nobody voted on and can't opt out of. Can't see it either. It's folded into a rate never labeled server form surcharge. Okay. Walk me through what that does to an actual bill, though. NRDC ran last year's spike alone, roughly a thirty percent bill increase for sixty-five million people across thirteen states. This year's auction stacks another five percent on top. So someone paying a hundred and fifty dollars a month is suddenly out an extra forty-five, fifty bucks- Right ... from an auction they've never heard of? That's the math. Now, is thirty-two gigawatts real demand or developers over-filing interconnection requests just to hold a spot in line? Nobody's grading these forecasts against what actually gets built. And PJM has no reason to lowball it. A tight forecast clears prices higher, and PJM isn't the one eating the bill. Very convenient. Very. So the forecast becomes the invoice basically before a single watt gets built. That's the trick. Which raises the obvious question, what did Washington actually do once this got loud enough to notice? So with all that PJM math sitting there, Washington actually did something, sort of. Sort of. March fourth this year, TechTimes reported the White House got the big data center developers into a room for something called the Ratepayer Protection Pledge. And they pledged what exactly? To cover the full cost of any new generation their facilities require. On paper, that's the whole ballgame. Stop socializing the bill. On paper. Yeah, I felt that pause coming. Because a pledge isn't a rule. Where's the enforcement mechanism? There isn't one. TechTimes own reporting on this from July fourteenth says the tariff structure most of these states use still requires grid costs to get spread across everybody unless a regulator writes an actual exception. So the pledge sits on top of a system that was never changed. Correct. It's a handshake layered over the same cost socialization plumbing we just walked through. And walk me through what auditing a voluntary promise even looks like. Who checks the math? Who checks that the generation these guys build actually gets billed to them and not folded into next year's capacity auction? Nobody, as far as I can tell. There's no state commission names, no penalty, no reporting requirement.

BlakeThat's the consensus trap right there. Everyone assumes a pledge from powerful companies functions like regulation because it sounds responsible.

MaxRight. And credit where it's due, the diagnosis is dead on. Cost-shifting onto residential ratepayers is exactly the problem. Whoever wrote that pledge language understood the disease.

BlakeAgreed. The prescription is the issue. Asking firms with this much market leverage to self-police their own cost allocation isn't market discipline.

MaxIt's an honor system for companies that just spent billions locking up transmission queues.

BlakeAnd MultiState's been tracking what happened next. State legislation didn't pause to wait and see if the pledge worked.

MaxSo legislators in dozens of states just didn't buy it?

BlakeDidn't wait to find out, and that's the fight we should actually look at next because a voluntary federal promise leaves a vacuum, and thirty-some states started writing enforceable law into that vacuum almost immediately.

MaxReal rules, real penalties, real fights over who even gets to decide this.

BlakeExactly the kind of fight worth tracing. Building on that toothless pledge, here's what actually moved. Three hundred data center bills, thirty-plus states in the first six weeks of twenty twenty-six.

MaxThree hundred in six weeks?

BlakeWilmerHale counted just over two hundred bills for all of twenty twenty-five, with forty signed into law. Six weeks into this year already blew past that.

MaxSo the acceleration is the story, not just the number.

BlakeThese aren't attraction bills anymore either. They're accountability bills. Texas got there first, actually. SB 6, signed June 2025, any large load customer pulling seventy-five megawatts or more pays its own interconnection costs and takes curtailment during grid stress.

MaxTexas told data centers to eat their own costs. That's not exactly what I'd expect out of Austin.

BlakeVirginia's doing something similar from the other side. Fifteen data center bills landed on the governor's desk this session.

MaxFifteen? What's the actual fight about?

BlakeA tax exemption worth roughly one point six billion dollars a year per MultiState's Virginia reporting. Lawmakers want conditions before they renew it.

MaxOne point six billion. If a state's economy runs on hosting these things, that's a real fight.

BlakeThen Oklahoma. SB 1488 would freeze anything over one hundred megawatts until 2029 pending a utility commission study. Twenty twenty-nine pending a utility commission study.

MaxHold on. A moratorium? That's not re-regulation. That's a wall with better paperwork.

BlakeOr it's Texas's curtailment idea, just blunter. Walk me through who's sponsoring it.

MaxFine. It's rural Republicans watching their co-op rates spike, not progressive Democrats.

BlakeSame instinct as the guy in Manassas, different jersey.

MaxOkay, so pick a lane. Is this the market finally pricing risk, or is it protectionism with a permit process?

BlakeDepends which lawmaker you ask. Texas calls it market discipline. Oklahoma calls it a safety valve.

MaxAnd that split doesn't even follow party lines.

BlakeWhich is the diagnosis everyone shares. Cheap power got expensive.

MaxYeah.

BlakeAnd somebody has to answer for it.

MaxWhich raises the question nobody in Washington wants asked out loud, which is if states keep writing three hundred different answers, does one federal signature get to overrule them all?

BlakeThat's where this gets uncomfortable.

MaxBuilding on that fight, Washington tried to settle it from above.

BlakeWith what?

MaxAn executive order December eleventh. It creates a DOJ AI litigation task force built to sue states over their AI laws.

BlakeSue states? Under what power?

MaxMm-hmm. Paul Hastings' write-up on the order says Commerce also gets directed to weigh conditioning broadband funding on states backing off their AI laws. We're talking forty-two billion dollars in BEAD money.

BlakeThat's interesting. Comply or lose your rural broadband check.

MaxPretty much the shape of it.

BlakeDoes any of that actually reach the fights we just covered? Compute citing the data centers themselves?

MaxNo. And that's the detail nobody's writing about. The order carves out state laws on AI compute and data center infrastructure.

BlakeHmm.

MaxExplicit exemption.

BlakeSo Texas's cost bill, Virginia's tax fight, Oklahoma's moratorium, untouched.

MaxUntouched. States drove straight through that gap. Every bill from last segment survives fully intact.

BlakeThen walk me through the legal question underneath it. Can an order like this actually preempt state law at all?

MaxWhite Case's analysis says no. Preemption is supposed to run through Congress passing a statute, not a president signing a directive.

BlakeRight. That's the Supremacy Clause doing its actual job. Article Six covers federal statutes and treaties. A memo isn't legislation no matter who signs it.

MaxI feel a but coming.

BlakeBut here's my problem with cheering this on. If you like it because you don't like some other state's chatbot law, you surrendered the argument for the next administration.

MaxYeah, that one cuts both directions.

BlakeFederalism isn't a team jersey you put on for the games you like.

MaxSo the pledge has no enforcement, the order can't legally reach where the money actually moves, and states are still writing three hundred different answers.

BlakeWhich means this was never just an energy story.

MaxIt's who decides.

BlakeAnd who pays.

MaxSame question, two doors. And that's not even the part that's gonna bother you most. So strip away the acronyms. What's actually happening is a handful of companies concentrate the demand, and millions of ratepayers who never got a vote absorb the bill.

BlakeA free market prices its own inputs. Spreading interconnection costs across every ratepayer's meter is a subsidy, plain and simple.

MaxSteinbach didn't vote for a data center showing up in his rate base.

BlakeNobody did. And that's why Texas Republicans and Virginia Democrats are writing nearly identical cost allocation language right now.

MaxSo what does somebody actually do Monday?

BlakeTwo things. Find your state's public utility commission website, pull up the rate case docket, and read the large load tariff filing. It's public record.

MaxWait, it's just sitting there for anyone?

BlakeSitting there with a comment period or a hearing date listed right on it.

MaxAnd the second thing?

BlakeCall your state legislator's office. Ask one question. Does our large load class pay full interconnection cost? Yes or no?

MaxNot a position paper, a yes or no.

BlakeIf they can't answer that plainly, you've got your answer.

MaxA law docket and a phone call. That's the whole ask. Wow.

BlakeCompute stays concentrated. Costs stays diffuse until someone with a vote decides otherwise.

MaxSo if there's one thread through all of this-

BlakeIt's that concentrated compute and socialized costs don't add up to a free market. Somebody's picking winners, and it's not the guy in Manassas.

MaxRight. He didn't vote for a data center. He just got the bill.

BlakeWhich is your homework. Look up your state utility commission's large load rate docket.

MaxRead the filing. It's public. It's dense, but it's there.

BlakeThen call your state legislator. One question, yes or no. Who pays for interconnection costs, the data center or you?

MaxGet it on the record. Thanks for spending the hour with us.

BlakeIf it helped, pass it to one person. Subscribe. Catch you Saturday.

MaxSee you then.