The promise was simple: hyperscalers would foot the bill for the energy infrastructure needed to support their massive AI operations, shielding everyday consumers from higher electricity rates. But that pledge, signed by tech giants at the White House in March 2026, is now colliding with decades-old transmission planning rules that were never designed for the data center boom. The result is a regulatory standoff that could reshape how America builds power infrastructure for the AI era.

The conflict centers on a planned 100-mile transmission line called the Mid-Atlantic Reliability Line (MARL), which would run from Pennsylvania to Virginia and cross through Maryland and West Virginia. NextEra, the project developer, selected the route through PJM (Pennsylvania-Jersey-Maryland Interconnection), the regional grid operator, based on a 2022 reliability assessment. The total cost: $960 million.

Here's the problem: when PJM approved MARL in 2022, artificial intelligence wasn't yet a defining political issue. OpenAI's ChatGPT hadn't launched. The wave of hyperscaler buildout and massive AI-driven electricity demand forecasts hadn't begun. The project was evaluated as a standard reliability upgrade, with costs shared across all regional customers according to PJM's traditional cost allocation method.

Why Did the Rules Suddenly Matter?

In March 2026, hyperscalers gathered in the Oval Office to sign the "ratepayer protection pledge," committing to pay for the energy infrastructure required to support their projects. This was meant to address growing public concern about rising electricity costs driven by data center demand. But when NextEra set out to obtain siting approvals for MARL in 2025, state regulators and consumer advocates immediately questioned whether the project's cost structure aligned with that pledge.

Pennsylvania's Office of the Consumer Advocate urged the state's Public Utilities Commission to reject the project, arguing that its primary function would be to "serve AI data center electricity demand in other states and resolve the transmission problems caused by out-of-state AI data centers." The concern: Pennsylvania ratepayers could bear a disproportionate share of costs while receiving no direct benefit.

The same challenge is emerging in other states. Maryland's ratepayer advocate published a report in March calling for greater regulatory scrutiny of transmission planning in PJM, noting that "PJM's method of allocating transmission costs has Maryland customers paying a substantial share of the regional transmission projects needed to serve out-of-state load growth".

What Would It Take to Redesign the System?

The core issue is that PJM's cost allocation method was designed for a different era. When all parts of a region grew at roughly even rates, costs ultimately evened out across customers. But when one location, like Northern Virginia's "Data Center Alley," drives a massive transmission buildout, that logic breaks down.

An estimate from the Institute for Energy Economics and Financial Analysis found that in West Virginia, which would host the largest portion of the MARL project, ratepayers would be responsible for around $570 million of the project's cost over 40 years, even though the transmission line primarily serves data centers in other states.

"PJM's current way of ratebasing transmission projects made sense in the past, when all parts of the region were growing at a roughly even rate. That becomes very much not the case when you have one class of customers in one particular location, like data centers in Northern Virginia, that are driving a tremendous transmission buildout," explained Cathy Kunkel, energy consultant at the Institute for Energy Economics and Financial Analysis.

Cathy Kunkel, Energy Consultant at the Institute for Energy Economics and Financial Analysis

The most likely fix, according to Kunkel, would be for PJM to assign the majority of MARL's cost to Dominion, the utility serving Virginia's Data Center Alley where the line ends, and let Dominion sort out assigning costs to data centers. But redesigning the region's cost allocation processes is no small feat, particularly given the other processes PJM is undertaking to get data centers online.

How Could Regulators Enforce the Ratepayer Protection Pledge?

Several states are pushing for the data center industry to enforce the ratepayer protection pledge, even though the White House commitment itself has no enforcement mechanism. Here are the key approaches being considered:

• State-Level Regulatory Scrutiny: Ratepayer advocates in Pennsylvania, Maryland, and other states are asking their public utilities commissions to investigate whether transmission projects serving data centers should be cost-allocated differently than traditional infrastructure.
• Direct Cost Assignment to Utilities: Assigning transmission costs to the utility serving the data center region, which would then negotiate cost recovery directly with data center operators rather than spreading costs across all ratepayers.
• Integration with Planning Frameworks: Aligning the ratepayer protection pledge with robust, proactive planning frameworks like FERC Order 1920 to ensure efficient, coordinated transmission buildout rather than a fractured, ad-hoc approach.

"In the past, infrastructure to support the concentration of data centers in Virginia's Data Center Alley was socialized across the entire region, and nobody said a word, because nobody really understood it. Today, however, as consumer electricity costs rise alongside new data center demand, there's an acute awareness: everything is going to be scrutinized, and it's good and it's bad," said Jon Gordon, senior director at Advanced Energy United.

Jon Gordon, Senior Director at Advanced Energy United

Gordon added that while protecting consumers from costs they shouldn't have to pay is important, "it's making it that much harder to build the new infrastructure that we desperately need to get out of this mess".

Gordon

What Are the Risks of Forcing Data Centers to Pay Their Own Way?

There's a paradox lurking in the ratepayer protection pledge. If data centers are forced to pay for all their own transmission upgrades and network infrastructure, they may have little incentive to move away from existing data center hotspots like Northern Virginia, where infrastructure already exists. This could actually worsen grid congestion and drive up costs further.

"When it comes to transmission planning, the rise of new large loads does create a challenge in terms of planning efficiency. If the ratepayer protection pledge isn't integrated with robust, proactive planning frameworks like FERC Order 1920, it will result in an inefficient, fractured, and ultimately more expensive build-out of the transmission grid," explained Evan Vaughan, executive director of MAREC Action, a nonprofit representing clean energy and storage interests in PJM.

Evan Vaughan, Executive Director of MAREC Action

Vaughan noted that data centers forced to bring their own generation and simultaneously pay for their own network upgrades and transmission buildouts wouldn't have much incentive to move away from existing data center hotspots, causing further congestion and increasingly expensive network upgrades.

NextEra is pushing to get MARL in service by the end of 2029, but the question of how to pay for it, especially in light of how the ratepayer protection pledge has upended industry expectations, could make that timeline impossible. The data center boom has added a whole new layer of complexity to the already tricky work of building transmission infrastructure, and the regulatory framework hasn't caught up.

The MARL case is just the beginning. As more transmission projects designed before the AI boom hit the regulatory docket, they'll face similar scrutiny. The outcome could reshape how America allocates the costs of grid modernization for decades to come, determining whether everyday consumers or tech giants bear the burden of powering the AI revolution.