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Author: Charles Harper and Medhini Kumar  Published: 01/23//2025    Evergreen Action

The PJM logo on a fuzzy TV screen with transmission towers in the background.

This June, 65 million Americans across 13 states will see their monthly electricity bills increase by up to 30 percent—all because of one shadowy organization standing in the way of low-cost clean energy.

That organization, PJM Interconnection (or just “PJM”), runs the electric grid for Pennsylvania, New Jersey, Maryland, Delaware, Ohio, Tennessee, Virginia, West Virginia, and D.C., and parts of Illinois, Indiana, Kentucky, Michigan, and North Carolina. And it is raising energy prices for homes and business owners this June, by up to 30 percent. Why? Because PJM is not connecting new energy to the grid fast enough, causing a shortfall in reliable power and skyrocketing annual energy auction prices. That shortfall is largely the fault of PJM and the energy and utility companies that tell it what to do and stand to profit from higher prices.

What Is PJM and Why Should You Be Paying Attention to It?

Regional transmission organizations like PJM are responsible for managing and operating the electrical grid. This entails managing the supply of energy from power plants (“generators”) sold to local utilities, which they then provide to consumers. The transmission organizations that run the electric grid hold regular auctions to make sure that enough power plants will be available to provide electricity for subsequent years. These transmission organizations, along with your power company, also manage the construction of large power lines, and decide which proposed power plants get hooked up (“interconnected”) to the grid. Basically, PJM and utilities make many of the decisions that affect how much people in their region pay for their electricity bills.

PJM is the largest such transmission organization, and it controls the electric grid for 65 million Americans—20 percent of the country. PJM is a limited liability company (LLC) that has thousands of voting members—primarily energy companies, utilities, and electricity customers—that have significant influence over how PJM operates.

PJM also holds regular energy auctions to determine which types of energy sources power our homes—whether those are affordable, renewable options or polluting, expensive fossil fuels. This makes PJM an incredibly powerful organization. While PJM makes the energy source decisions, it’s ultimately their customers who end up paying for them. And recently, PJM has been making lousy decisions, like delaying the interconnection of wind and solar energy projects and instead increasing energy costs in the region. The exact increase depends on where you live and how much power you use, but it varies from 2 percent to 30 percent. In Philadelphia, it’s a 10 percent increase in your monthly bill, and in Chicago it’s $7.50 to $10 per month. In New Jersey, it’s $12 to $15 per month, and in Maryland, the increase is $4 to $21 monthly. That could add up to $252 more in just one year.

Why Is PJM Raising Power Prices?

Skyrocketing prices in this year’s energy auction resulted from increasing energy demand driven by data center development, unreliable fossil power during extreme weather, and PJM’s inability to approve the construction of new energy projects (95 percent of which are clean energy) to meet this demand.

PJM is the worst among its peers when it comes to connecting new energy to the grid and has the worst interconnection backlog in the country. Over 3,000 projects have been waiting for years to connect to the PJM grid and bring down auction prices, but PJM has entirely paused its interconnection queue since 2022. Of the 157,765 MW of projects submitted to PJM since 2020, exactly 1 MW has gone into service as of June 2024. PJM has the slowest interconnection process of any grid operator in the country, with the average project waiting over five years just to get the go-ahead from PJM to start construction. PJM must fix its interconnection queue and allow these thousands of clean energy projects online.

Nearly all of these projects waiting to be connected—95 percent—are clean energy and energy storage projects. We know that renewable energy sources like solar and wind are the cheapest form of electricity, even before federal tax credits cut their costs by an additional 30 to 88 percent. This means PJM could be addressing its increased demand with affordable clean energy, but instead, ratepayers are paying the consequences of inaction on their electric bills.

PJM decision-making is heavily influenced by its voting members, primarily utility and energy companies that heavily rely on fossil fuel power plants. These companies have a vested interest in protecting their profits from the competition of low-cost clean energy, and they and PJM have worked together to prevent reforms. PJM and these utilities are to blame for this crisis.

PJM Is Prioritizing Unreliable Gas Over Clean Energy

Despite its abysmally slow interconnection process, there is one source of energy PJM is choosing to prioritize—and it’s the expensive, dirtier one: gas. Instead of fixing its queue and allowing cheap clean energy to come online and save customers money, PJM is going all-in on expensive and unreliable fossil fuel technologies.

PJM’s decision-making showcases a conflict of interests: Customers want lower costs, less pollution, and reliable energy, and states with clean energy goals want more renewables online, not less. But PJM is overlooking the interests of millions of Americans in its service territory by choosing to prioritize the dirty and expensive energy, instead.

Gas plants have already led to higher prices. One of the reasons that capacity auction prices are higher this year is because of the widespread failure of gas plants in recent winter storms. Gas power plants in the region that were rated previously by PJM as 92-95 percent available fell to 62-79 percent in this auction. Gas plants and pipelines are more likely to fail during extreme weather, whereas wind, solar, and storage are able to provide reliable power in extreme temperatures. We saw this to be the case most notably in Winter Storm Uri in Texas and Winter Storm Elliot in the Midwest and Northeast.

But instead of taking that as a cue to diversify away from gas, PJM is doubling down. PJM recently asked the federal government to approve a plan that would fast-track gas power plants in the queue over the (mostly clean) resources that have been waiting for years to connect to the grid. Gas is far more expensive than clean energy, so fossil energy companies need PJM to put its thumb on the scale to overcome unfavorable economics.

PJM is parroting GOP and fossil fuel talking points in this effort, claiming that relying on renewables would break the grid and that gas is needed for reliability. Meanwhile, back in reality, PJM got less than 5 percent of its electricity from wind and solar in 2023. Other grid regions like SPP and ERCOT managed a grid with 37 percent and 31 percent wind and solar energy, respectively, without issue in 2023. PJM’s claims would be laughable if they weren’t so deadly serious for our climate and for families’ budgets. Rather than fixing the jammed queue itself, PJM is focused instead on letting gas plants cut in line.

What Can We Do About It?

PJM is running its next energy auction in July, which could lead to even further rate increases if action isn’t taken now. Pennsylvania Governor Josh Shapiro recently sued to get PJM to fix issues in its next auction process to avoid an additional $20 billion in cost increases. PJM should certainly lower the cap on auction prices and include “reliability must-run” resources in this auction. Issues will remain, however, until PJM solves underlying problems with the interconnection queue.

PJM must work to speedily reform and reopen its regular-order interconnection queue process, including by fully implementing FERC Order 2023’s “first-ready, first-served” cluster study requirements. PJM has thus far refused to do so. Interconnection issues, including high network upgrade costs that cause prospective projects to drop out of the queue, are ultimately downstream of transmission constraints. PJM must robustly and quickly implement FERC Order 1920 and begin proactively planning and building new transmission so that new resources can come online to meet rising power demand without astronomical grid upgrade costs hanging over their heads.

PJM has recognized that this situation is untenable and is asking FERC to approve changes to its Surplus Interconnection Service process, which allows new projects to take advantage of existing interconnection agreements that aren’t using their full capacity. FERC should approve this request, while rejecting other asks such as PJM’s gas fast-track proposal (the “Reliability Resource Initiative”) that would violate FERC fairness and non-discrimination doctrines.

States can also take steps to keep down energy bills and ensure PJM works to keep costs down. Other states can follow the lead of Pennsylvania and consider leaving PJM unless PJM truly works to reform interconnection and prevent future price hikes. States can also soften the blow of price hikes by increasing annual energy efficiency targets for utilities through their Public Utility Commissions, implementing cap-and-invest programs like RGGI or PACER in Pennsylvania that return money directly to ratepayers, or limiting utility’s guaranteed rate of return while utilities are using their influence within PJM to resist changes that would have prevented these rate hikes. States can also increase PJM and utility accountability by requiring PJM to provide voting reports of key PJM committees to increase transparency and provide more visibility regarding PJM actions for the public.

Additionally, states should work to streamline projects and technologies that would prevent future rate hikes. State legislatures can streamline siting and permitting for clean energy and transmission projects so that energy can be added to the grid more quickly. They can also require utilities to deploy grid-enhancing technologies and virtual power plants that get more capacity out of the existing transmission grid and demand-side resources.

The Bottom Line

The cause of these massive rate hikes can sound complicated. But the bottom line is that low-cost clean energy is the solution to bring down sky-high electricity bills for millions of Americans. We need more of it, and we need it now. Only by allowing cheap solar, wind, and storage projects to come online quickly will we prevent future cost increases. PJM’s inaction has already caused one massive rate hike. That is one too many.

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For Immediate Release: Thursday, January 23, 2025
Press Contact: emily@evergreenaction.com

ICYMI: Governors Back Shapiro’s PJM Complaint

Last week, four current and former governors sent a letter to the Federal Energy Regulatory Commission (FERC) in support of Pennsylvania’s complaint against PJM’s capacity auction. The letter, signed by Govs. Wes Moore, J.B. Pritzker, Phil Murphy, and former Gov. Bethany Hall-Long, echoes Shapiro’s concerns of PJM’s energy grid management and the subsequent rise in costs for consumers in their states.
In response, Evergreen Action Deputy State Policy Director Julia Kortrey released the following statement:

“PJM’s upcoming auction is riddled with major flaws that could end up costing customers an unnecessary $20 billion. We commend these governors for standing with Governor Shapiro to demand better for the ratepayers in their states. PJM customers are already facing electric bills that are projected to rise up to 30 percent higher due to the failures of PJM’s last capacity auction. It’s clear that PJM won’t course-correct on their own—it’s time for FERC to intervene and ensure that these critical issues are addressed in both their interconnection process and next auction so customers aren’t hit with another unnecessary and burdensome rate hike.”

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