Gov. Josh Shapiro this week landed an agreement with regional transmission organization PJM Interconnection LLC to resolve their pending lawsuit in a deal that the governor says could save consumers across the RTO’s region, which includes Pennsylvania, more than $21 billion over the next two years.
“When PJM’s next auction was set to result in historic price hikes, I filed a lawsuit to stop this price hike on consumers and defend Pennsylvanians,” Shapiro said in a Jan. 28 statement. “PJM did the right thing by listening to my concerns and coming to the table to find a path forward that will save Pennsylvanians billions of dollars on their electricity bills.”
Shapiro filed a complaint in December 2024 with the Federal Energy Regulatory Commission (FERC) alleging flaws in PJM’s capacity auction design that his administration said threatened to impose significant new price increases if left unaddressed prior to PJM’s next capacity auction in July.
“As the demand for energy continues to increase, my administration is taking action to demand PJM fix its broken processes and adopt common-sense reforms that will allow us to produce more power and meet record-high electricity demand, while keeping costs low for hardworking families,” Shapiro said Dec. 30 after filing the complaint.
Nearly a century ago, the commonwealth helped found PJM, which operates a capacity market, meaning operators are paid to commit to providing energy in the future. However, as energy demand has soared over the last several years, PJM has been slow to allow new power sources onto its grid, resulting in higher capacity prices.
For instance, PJM’s 2025-2026 capacity auction held in July 2024 resulted in costs of $14.7 billion, an over 800-percent increase from the prior year, according to Shapiro’s office.
Thursday’s newly announced agreement — which lowers the capacity auction price cap from over $500/megawatt-day (MWd) to $325/MWd — will avoid such price hikes on consumers across all 13 states served by PJM, including Pennsylvania, said the governor.
“My administration will continue to work to ensure safe, reliable, and affordable power for Pennsylvanians for the long term,” Shapiro said this week.
And while PJM and the Shapiro administration have agreed on how to move forward on the complaint, it is still subject to consultation with PJM members and the PJM Board of Managers.
But to avoid further delays to the auction schedule, PJM plans soon to seek a FERC order by proposing a cap and floor mechanism through an FPA section 205 filing with FERC.
At the same time, the Commonwealth Foundation on Tuesday called the agreement a “PR stunt” and requested that Shapiro support energy policies that prioritize affordability and reliability rather than continuing to champion the Regional Greenhouse Gas Initiative (RGGI), the Pennsylvania Climate Emissions Reduction Act (PACER), and the Pennsylvania Reliable Energy Sustainability Standard (PRESS).
The foundation says such initiatives threaten to cause energy prices to increase further for Pennsylvania families and businesses.
“Gov. Shapiro’s latest announcement is nothing more than a red herring to distract from his own policies that have sent electricity rates skyrocketing in Pennsylvania,” said Commonwealth Foundation Chief Policy Officer Nathan Benefield. “If he were committed to reducing energy costs for families, Shapiro would abandon his lawsuit over RGGI, an unconstitutional energy tax that will increase electric rates by 30 percent.”
Shapiro also should drop PACER and PRESS, Benefield added, saying they’re “misguided legislative proposals” that also are likely to raise consumer costs.
“Shapiro should spend less time congratulating himself and instead deliver on his unfulfilled campaign promises to work with the legislature to reduce the burden on families and businesses,” he said.