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

PJM’s current capacity auction design forces ratepayers to absorb $12 billion in avoidable costs due to systemic modeling errors and inefficient market structures. By failing to account for the increased efficiency of gas turbines in winter and relying on backward-looking reliability data, the grid operator consistently over-procures capacity. These bureaucratic failures, compounded by slow interconnection processes and inadequate lead times for new power plants, create artificial scarcity that drives up electricity prices. While data center demand is frequently cited as the primary driver of these rate increases, the underlying issue remains a rigid, centralized planning model that struggles to adapt to modern energy needs. Rather than incentivizing reliability through better winterization, the current system penalizes consumers, highlighting a critical need for governance reform and more localized, flexible grid management to ensure long-term stability and cost-efficiency.