PJM Auction Results in Higher Prices for Ratepayers in 13 States
WASHINGTON, D.C. – Capacity prices in PJM Interconnection, the largest US power grid, increased from $14.7 billion to $16.1 billion, to be paid by ratepayers in 2026 and 2027. Last year’s price spike increased electricity bills by about 30% for 65 million people across the region – this auction will increase bills by another 5%.
The following is a reaction from Tom Rutigliano, senior advocate, Climate & Energy at NRDC (Natural Resources Defense Council):
“Today’s auction results are just more bad news for PJM’s customers. Prices went up for two reasons: ever increasing demand from data centers and lower reliability from gas-fired power plants. The amount of available generation decreased almost entirely because of gas plant reliability problems, not power plant retirements.
“The bright spot in this auction is a 75% increase in wind and solar. That jump will save PJM from an unacceptable risk of blackouts in 2026. PJM will stay reliable in 2026 thanks to the increase in renewable power. However, these low-cost resources still only account for 4% of PJM’s supply, so PJM must continue to significantly speed up approvals of the 85 gigawatts waiting to connect. The only real solution to higher energy prices is to keep adding more renewable energy and storage to the grid.
“At the same time, states must address the siting and permitting challenges that are keeping the 37 gigawatts of PJM-approved projects from starting construction. Bringing just a fraction of these projects into service will ensure more affordable and reliable electricity.”
Background:
PJM Interconnection is the regional transmission organization (RTO) that manages the transmission and wholesale electricity market for thirteen states and D.C. in the eastern United States. The PJM states include: Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, and West Virginia. New Jersey legislators have been vocal about PJM’s short-falls, most recently introducing legislation to require its Board of Public Utilities to study leaving PJM Interconnection. Pennsylvania Governor Josh Shapiro has considered removing the state from PJM Interconnection and recently settled a lawsuit, which resulted in establishing a price “cap” that saved ratepayers almost $3 billion in today’s auction while having no negative effect on reliability. Pennsylvania legislators passed a PJM transparency bill through the House in early July. Click here for more information on why the cost of electricity is rising in PJM states.
NRDC (Natural Resources Defense Council) is an international nonprofit environmental organization with more than 3 million members and online activists. Established in 1970, NRDC uses science, policy, law, and people power to confront the climate crisis, protect public health, and safeguard nature. NRDC has offices in New York City, Washington, D.C., Los Angeles, San Francisco, Chicago, Bozeman, MT, Beijing and Delhi (an office of NRDC India Pvt. Ltd). Visit us at www.nrdc.org and follow us on Twitter @NRDC.