Pennsylvania governor complains to regulator about PJM’s power market rules

NEW YORK (Reuters) – Pennsylvania Governor Josh Shapiro filed a complaint with a federal energy regulator against PJM Interconnection on Monday, arguing that the largest U.S. power grid operator must change its market rules or risk soaring electricity costs.

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.

“It is difficult to escape the conclusion that PJM’s capacity market is currently failing,” Shapiro, a Democrat, and the Commonwealth of Pennsylvania said in the complaint filed with the Federal Energy Regulatory Commission.

The complaint argues, in part, that PJM’s capacity market price cap is unreasonably high and threatens to add billions of dollars to power bills while failing to substantially increase grid reliability. If certain market rules remain in place, ratepayers across the PJM region could see as much as a $20.4 billion increase in costs, the complaint said.

In the last annual auction, PJM agreed to pay power generators roughly 900% more than it paid the previous year, attributing the surging prices to tightening power supplies and rising electricity demand.

At least some of those costs will be paid by homes and businesses in PJM’s territory.

“Fundamentally this is a supply/demand problem that is leading to high consumer pricing, driven primarily by policy choices that are pushing resources off the system, along with data center and electrification demand growth,” PJM spokesperson Susan Buehler said.