Agreement should save customers money, hopefully jump-start delayed renewable energy projects
HARRISBURG, Pa. – PJM, the grid operator responsible for keeping the lights on in 13 Mid-Atlantic and Midwestern states, announced a settlement Tuesday with Pennsylvania Gov. Josh Shapiro that could save PJM’s 65 million utility customers $21 billion over the next two years. The settlement includes a lowered cap on prices in an upcoming capacity auction that will set prices starting in 2026.
Gov. Shapiro, on behalf of the state of Pennsylvania, filed a complaint in December, in response to a $12.5 billion spike in “capacity charges” that PJM’s electric customers will have to pay. Capacity charges are meant to cover the costs of delivering power to the electrical grid at times of peak demand, such as hot summer days. That increase is scheduled to show up on electric bills starting in June.
In a functioning capacity market, capacity prices go up in response to low energy supply, incentivizing the development of new sources of power, such as wind farms or power plants, to meet demand. PJM, however, already has 286.7 gigawatts (GW) of proposed energy projects waiting to be connected to the grid – enough to power roughly 228 million homes for a year.
Ninety-five percent of PJM’s unconnected projects involve renewable energy. PJM, whose voting membership includes many fossil fuel power plant owners and utilities, has proposed following its own, lengthier timeline, rather than Federal Energy Regulatory Commission (FERC) requirements. PJM’s delays on reforming its interconnection processes prevent those projects from providing clean, reliable and affordable energy to the grid, and consumers pay the price.
The governors of four other states in PJM’s service territory — Illinois, New Jersey, Maryland, and Delaware — supported Gov. Shapiro’s complaint in a joint statement to FERC. New Jersey Gov. Phil Murphy and Maryland Gov. Wes Moore also sent letters to PJM, urging it to change its market rules to protect consumers.
In response, David Masur, PennEnvironment Research & Policy Center’s executive director, issued the following statement:
“We thank Governor Shapiro for his action — and so should all of Pennsylvania’s utility customers. Now, it’s critical that PJM allows more renewable energy onto the grid.
“Renewable technologies are creating new opportunities to power our lives with energy that doesn’t pollute our air, land and water. We look forward to working with Governor Shapiro and others to bring more of the benefits of renewable energy to the Commonwealth.”
Abe Scarr, U.S. PIRG Education Fund’s Energy and Utilities Program director, issued the following statement:
“Thanks to Pennsylvania Governor Josh Shapiro and the other governors who supported this complaint, consumers will be spared from billions of dollars of excessive utility bill charges. But while this is welcome news, consumers still face major utility bill spikes this summer, and the underlying problems with PJM remain.
“Our state leaders should continue to pressure PJM to fix its broken interconnection process, stop holding up clean energy and reform its decision-making structure to prioritize the public interest.”
