By Peter Hall | Pennsylvania Capital-Star
Pennsylvania and the region’s electrical grid operator PJM Interconnection have reached an agreement that Gov. Josh Shapiro’s office said Tuesday will protect consumers against steep increases in their power bills.
PJM Interconnection, which operates the long-distance electric power distribution network in all or parts of 13 states including Pennsylvania, has agreed to reduce the maximum price that energy generators can bid to provide electricity to meet future demand on the grid.
“Left unaddressed, PJM’s next capacity auction scheduled for July 2025 would have resulted in billions in unnecessary energy costs for 65 million people across the region,” Shapiro’s office said in a statement Tuesday.
Shapiro’s office filed a complaint in December with the Federal Energy Regulatory Commission claiming there are flaws in PJM’s auction design. Skyrocketing demand for energy driven by the proliferation of artificial intelligence data centers, unreliable fossil fuel-based generating plants, and PJM’s backlog of new energy projects waiting to be connected to the grid threatened to create runaway energy prices, the complaint claimed.
The complaint asserted that electricity producers would not be able to bring new energy sources online in time to meet the increasing demand, making the higher prices for consumers unjustified.
The governors of New Jersey, Maryland, Delaware, and Illinois joined Shapiro’s call for reform.
Electricity producers and industry organizations including the Electric Power Supply Association, a national trade association representing competitive power suppliers, opposed the complaint. The trade group said Pennsylvania’s filing demonstrated a misunderstanding of PJM’s system, which is designed to ensure producers have a price incentive to build new generating capacity.
“The governor worked with PJM to significantly lower the capacity auction price cap … and averting a runaway auction price that would have unnecessarily increased energy bills,” Shapiro’s office said.
A spokesman for PJM did not respond to a request for comment Tuesday. However, PJM has noted in the past that many projects have cleared its interconnection process but still haven’t been built because of supply chain, permitting and other issues outside of the grid operator’s control.
Under the agreement, PJM will reduce the maximum auction price from $500 per megawatt-day to $325 per megawatt-day. A megawatt-day is a megawatt of energy produced continuously for 24 hours, roughly enough electricity to power 400 to 900 homes for a day, according to the Nuclear Regulatory Commission.
Patrick McDonnell, CEO of the environmental group PennFuture, said in a statement Tuesday that while the agreement would prevent electricity price increases this summer, they could increase again by 40% in following years.
“This settlement will not fix the fundamental flaws in the market,” McDonnell said.
PennFuture said more effort is needed to break the backlog of new energy projects waiting to be connected to the grid and prioritize renewable energy sources.
Pennsylvania Capital-Star is part of States Newsroom, a network of news bureaus supported by grants and a coalition of donors as a 501c(3) public charity. Pennsylvania Capital-Star maintains editorial independence. Contact the editor for questions: info@penncapital-star.com. Follow Pennsylvania Capital-Star on Facebook and Twitter.
Advertisement
Convenient Legal Access to High Quality Cannabis Just A Few Minutes Away!
