But such a move is likely hollow since it would drive power rates even higher in the short term
By Kathryn Krawczyk, Canary Media
The U.S. is home to seven regional transmission organizations and independent system operators that are each responsible for managing power transmission and operating energy markets among utilities in their area. PJM is the largest, serving more than 65 million customers across D.C., Ohio, Pennsylvania, Virginia, and 10 other states. And for years, leaders in those states have said it’s not doing a great job.
The crux of the issue is rising electricity prices. This summer, PJM announced a new record in its annual capacity auction, which it uses to secure power resources for the grid. Prices hit $16.1 billion, up from $2.2 billion in 2023, Canary Media’s Jeff St. John reported in July.
There are a few reasons for the spike in costs. For one, PJM expects that it will need a ton more power-generation capacity in the coming years as data centers come online — though experts dispute just how big the AI energy-demand bubble will actually be. PJM does have a massive backlog of clean-power and battery projects looking to connect to the grid and meet that demand. But the operator hasn’t undertaken reforms that critics say could speed interconnections, and is instead campaigning to keep expensive, dirty fossil-fuel power plants online.
PJM member states’ longstanding dispute with the grid operator reemerged this week as 11 of their governors met in Philadelphia. There, Pennsylvania’s Democratic Gov. Josh Shapiro and Virginia’s Republican Gov. Glenn Youngkin both said they would leave PJM if states don’t get a bigger role in the grid operator’s governance.
“This is a crisis of not having enough power, and it is a crisis in confidence,” Youngkin said. “It’s this crisis that demands real reform, real reform immediately — and at the top of the list is that states must have a real say.”
PJM President and CEO Manu Asthana acknowledged that his organization needs to take cost-cutting steps like improving its load forecasting and interconnection processes, but he also put the onus on states to better their own infrastructure siting and permitting rules.
Washington Analysis researcher Rob Rains is doubtful that states will follow through and depart PJM. He said doing so could actually cost customers more in the short term, as the states may have to negotiate their own power procurement at rates even higher than what PJM has secured. Rains predicts that instead of cutting ties with the grid operator, governors will pull other levers to pressure PJM to establish stronger power-market safeguards to keep prices low.
Meanwhile, analysts at ClearView Energy Partners suggest that states should continue their efforts to develop more electricity generation as soon as possible.
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