The Federal Energy Regulatory Commission (FERC) on Monday unanimously approved a settlement between the Shapiro administration and PJM Interconnection LLC to resolve price hikes planned by the regional transmission organization.
“When PJM’s next auction was set to result in historic price increases, I took action to stop this price hike on consumers and defend Pennsylvanians,” Pennsylvania Gov. Josh Shapiro said April 22. “My administration worked with FERC and PJM to find a path forward that will save Pennsylvanians billions of dollars on their electricity bills.”
The lawsuit — first filed by the commonwealth in December 2024 — asserted that the price cap for PJM’s Reliability Pricing Model (RPM) auctions was unjust and unreasonable.
Left unaddressed, PJM’s July capacity auction could have tripled energy costs for 65 million people across PJM’s region, which includes Pennsylvania, as well as all or part of Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Tennessee, Virginia, West Virginia, and the District of Columbia.
In fact, Shapiro said that resolution of the complaint will save consumers more than $21 billion over the next two years.
Specifically, the commonwealth’s complaint criticized flaws in PJM’s capacity auction design that it said threatened to impose significant new price increases. Shapiro said he worked with PJM to reach an agreement in January to significantly lower the capacity auction price cap by 35 percent, averting a runaway auction price.
In February, PJM proposed revisions to its transmission tariff that would establish a price cap and price floor for all RPM auctions for the 2026-2027 and 2027-2028 delivery years, according to FERC, which said in its ruling that the commission accepted PJM’s revisions, effective April 22.
PJM operates a capacity market, which means that electric generators 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.
A diverse coalition of energy and consumer advocates, including four other governors and the Organization of PJM States, joined Shapiro in pushing PJM to reduce its price cap.
“I will continue to work to ensure safe, reliable, and affordable power for Pennsylvanians for the long term,” Shapiro said.
Pennsylvania Senate Majority Leader Joe Pittman (R-41), who has said the commonwealth’s lawsuit was frivolous, previously acknowledged that Pennsylvanians have been forced to deal with the realities and pressures of higher energy costs.
“A strong, reliable, and cost-effective energy portfolio across our commonwealth requires embracing an all-encompassing strategy when it comes to the generation and distribution of power,” he said, noting that the Senate Republican Caucus will continue to advocate for responsible enactment of energy policies that balance the state’s supply of natural resources with environmental needs.