American Electric Power (AEP) is reviewing its membership in the PJM Interconnection and Southwest Power Pool (SPP) regional transmission organizations [1].
The potential exit signals a growing conflict between major utilities and the grid operators tasked with managing the U.S. energy transition. If AEP leaves these organizations, it could reshape how power is distributed and managed across several states.
Bill Fehrman, AEP Chairman, President and CEO, said that the company is evaluating its market options due to slow generation interconnection processes [1]. The utility is currently managing contracts for new large-load capacity totaling 63 GW by 2030 [1]. Fehrman said the current pace of the grid operators threatens the company's ability to meet these obligations.
"Our teams need a faster way to interconnect our many projects and PJM’s performance needs to improve," Fehrman said [2].
The frustration centers on the "interconnection queue," the process by which new power projects are approved to connect to the grid. In the PJM queue, a project as small as 20 MW can trigger grid upgrade costs reaching $50 million [3]. These costs and delays create significant bottlenecks for utilities attempting to scale their infrastructure rapidly.
Fehrman said that "membership is under review" [2]. The company has not yet announced a final decision on whether to exit the organizations, but the move would be a significant departure from the industry standard of utilizing regional transmission organizations to manage wholesale power markets.
AEP's struggle highlights a systemic issue where the physical grid cannot keep pace with the contractual demands of new energy consumers and producers. The company's 63 GW target [1] represents a massive increase in demand that requires streamlined regulatory and technical approvals to avoid power shortages or stalled economic development.
“"Our teams need a faster way to interconnect our many projects and PJM’s performance needs to improve."”
AEP's threat to leave PJM and SPP underscores a critical failure in the U.S. power grid's ability to integrate new capacity. As large-scale energy demands grow—driven by industrial expansion and data centers—the bureaucratic and financial hurdles of the interconnection queue become business risks. If one of the largest utilities in the U.S. finds the regional operator model untenable, it may prompt other utilities to seek alternative grid management structures or pressure regulators to overhaul the interconnection process.
