The Shapiro administration on Monday filed a formal complaint with federal energy regulators against PJM Interconnection LLC to prevent price hikes on 65 million customers, including 13 million Pennsylvanians.
Specifically, the new complaint filed with the Federal Energy Regulatory Commission (FERC) against PJM Interconnection criticizes flaws in the company’s capacity auction design that if, left unaddressed, could result in $20.4 billion in unnecessary energy costs across PJM’s region during its next capacity auction scheduled for July 2025, according to the complaint filed by Pennsylvania Gov. Josh Shapiro and the Commonwealth of Pennsylvania.
“It is difficult to escape the conclusion that PJM’s capacity market is currently failing,” according to the 44-page complaint.
And because PJM is not currently allowing new power plants to request connection to its grid, and due to other flaws in its capacity model, PJM capacity auctions are leading to record-high costs without safeguarding reliability, the complaint says.
“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 hard-working families,” Shapiro said in a statement. “My administration stands ready to support PJM in implementing these reforms to ensure safe, reliable, and affordable power for consumers for the long term.”
PJM Interconnection, which runs the electrical grid covering more than 65 million Americans across parts of 13 states from Illinois to New Jersey, has faced increased public scrutiny since July when it said its annual capacity auction would result in record-high payments to power plants in its system.
As the nation’s largest regional transmission organization, PJM operates a capacity market, which means that operators are paid to commit to providing energy in the future. Over the last several years, demand for energy has risen rapidly but PJM has been slow to allow new power sources onto its grid and as a result, PJM capacity prices have skyrocketed, according to Shapiro.
For example, PJM’s 2025-2026 capacity auction, held in July, resulted in costs of $14.7 billion, an increase of more than 800 percent from the prior year. And those costs are expected to rise and be paid by customers in Pennsylvania and in other states across PJM’s territory, the complaint states.
PJM recently told FERC that its auction prices are too high, but its response has been to offer half-measures and promise future fixes in the years ahead, Shapiro said, adding that Pennsylvanians cannot afford PJM’s delays and should not have to foot the bill for its unwillingness to make the reforms necessary to avoid unnecessary price hikes.
“It is currently physically impossible for new resources to respond to high [auction] signals and enter PJM’s marketplace,” according to the complaint, and under such conditions, PJM’s auction rules are misfiring, producing record price increases that don’t benefit consumers or assure grid reliability.
In fact, PJM’s rules are so poorly suited for this moment that consumers may be expected to pay prices that rise a staggering 30,000 percent above the industry’s metric for the highest reasonable price for reliability.
The complaint offers specific proposals that could fix PJM’s capacity market before the next auction in July 2025, noting that if FERC orders PJM to adopt these changes, consumers will save more than $20 billion, right-size the capacity market’s maximum price to stabilize the market, and avert potentially the most expensive capacity auction result in the history of U.S. energy markets.
“This commission is the only formal check on PJM. It must look skeptically at any claims by PJM that a lower price cap would impair the marketplace or impact reliability in the next two auctions,” Shapiro and the state tell FERC in the complaint. “The current course is unsustainable. Excessively high auction prices that do not, and cannot, produce substantial supply increases in the real world threaten not only millions of consumers across Pennsylvania but the continued viability of PJM’s capacity market. Averting that outcome is essential, just, and reasonable.”
Pennsylvania Senate Majority Leader Joe Pittman (R-41) said that Shapiro’s complaint rings hollow.
“Over 13 months ago the Commonwealth Court ruled the RGGI Electricity Tax violates our state Constitution,” Pittman said Tuesday. “Yet Gov. Shapiro refuses to accept the decision and continues to waste more taxpayer dollars appealing the decision to the Supreme Court.
“If the governor is truly committed to protecting consumers, he should start by dropping his own lawsuit in defense of a program destined to increase the cost of electricity by nearly a half billion dollars annually,” he added. “Simply voicing support for an all-of-the-above energy strategy while actively thwarting meaningful progress to move Pennsylvania forward by miring the energy marketplace in the six-year debate over the RGGI Electricity Tax is detrimental to the future stability of our commonwealth’s energy grid.”
Pittman also pointed out that throughout the 2023-2024 legislative session, the Senate Republican Caucus prioritized advancement of meaningful legislation to help address rising costs for consumers of electricity.
“It is unfortunate that many of the measures were not supported by the Shapiro administration,” he said.