By Tim McLaughlin

BOSTON, May 20 (Reuters) - Power plants on the largest U.S. electric grid received a record payout of nearly $1 billion to cover their losses in the first quarter, when fuel costs surged during a winter cold snap, according to data analyzed by Reuters.

The so-called uplift payments by PJM Interconnection, which covers a population-dense region stretching from Washington D.C. to the Great Lakes, went to power plants dispatched to run even when they earned too little in the wholesale electricity market to cover their natural gas costs.

Those huge payments will ultimately be shouldered by ratepayers through their power bills, and reflect growing instability on an aging system already struggling to keep up with rising demand from data centers feeding the AI boom.

"The payments to these old, uneconomic power plants is really a telltale signal of the problems on the PJM system," said David Lapp, the head of Maryland’s Office of People's Counsel, a state agency that advocates for residential utility consumers.

"And it's a lot of money going to what is not ultimately a long-term solution," Lapp added.

Spot gas prices spiked to historic levels throughout the Eastern United States in January as temperatures plunged, with many hubs trading above $100 per million British thermal units (mmBtu), according to PJM.

The average that month was less than $8 per mmBtu.

PJM's uplift credits compensated generators for their losses acquiring fuel to ensure they followed dispatch orders and maintained a reliable flow of electricity.

The first-quarter total of $990 million for power plant uplift payments exceeded the combined annual total of $764 million in 2025, a year that included a winter polar vortex and record demand, according to the data updated on May 10.

It also dwarfed the $270 million on uplift payments PJM made during all of 2024, according to the data.

"During such periods, such as Winter Storm Fern in January, PJM required all available power generation to prepare for impacts of high demand, extremely low temperatures and higher-than-usual generation outages," PJM said in a statement to Reuters.

HARBINGER

While the record payouts were linked to an unusual deep freeze, analysts anticipate more big outlays in the future, too. That's because the buffer against blackouts for PJM, which manages the supply of electricity for 67 million people, is nearly 40% below the target set by the regional grid system.

The primary driver of the decreased buffer is surging demand and data center load growth outstripping the pace at which infrastructure can be built to supply it. This shortfall is only projected to grow over the next decade as new large loads come onto the system, PJM said in a May report.

The surge in uplift credits underscores how vulnerable PJM’s operations have become to extreme weather, power plant outages, congested transmission lines and fuel supply disruptions.

This month, PJM officials said the grid is in the throes of a fundamental mismatch between how fast data center demand is growing and how fast new supply can follow.

During the first-quarter cold spell, Maryland’s Chalk Point power plant, whose two main gas generators are 45 and 51 years old, received $205 million in uplift payments, the highest amount for any single power plant, according to the data.

Despite its age, Chalk Point is one of PJM’s best pieces of insurance against rotating blackouts in a grid zone that covers metropolitan Baltimore and Washington D.C. and which sometimes struggles to bring in enough electricity from elsewhere in its overloaded power lines.

Too many power plants serving Maryland were retired, leaving the state vulnerable to transmission bottlenecks, Lapp said.

"They’re blaming gas prices that spike during that stressful time for the high payments. But you know, the underlying problem is you just don't have enough capacity," Lapp said.

Houston private equity firm Rockland Capital, the plant’s owner, declined to comment for this story.

Exelon Corp EXC.O, whose subsidiaries serve metro Baltimore, said it is adding about 37 miles of power lines in the area to help offset significant generation retirements.

"This is just one example of transmission infrastructure investments across Maryland not only helping prevent voltage collapse but helping transfer large amounts of power, reduce congestion costs, and save Maryland customers billions of dollars," Will Sauer, Exelon’s vice president for federal affairs, said.