US Governors push back against PJM following record-high prices for power plants
Five governors urged PJM Interconnection on Tuesday to change its process for determining the price of power plants, after the auction that saw record prices.
Prices in the most recent PJM auction were almost 10 times higher than last year. This was largely due to a shrinking supply of electricity and an increasing demand for electricity.
Prices were set at levels that raised concern about the cost of electricity for homes and businesses on PJM territory. Environmental groups filed a complaint to PJM over its pricing process.
In a letter sent to PJM, the governors of Pennsylvania and Illinois, Maryland and New Jersey, and Delaware stated that the results of the capacity auction will cost businesses and homes in the 13 states, including the District of Columbia, served by PJM, $14.7 billion.
The group stated that "urgent action is required to prevent customers paying billions of dollars more than necessary."
These governors urged PJM, among others, to expand the number of power stations in its auction, increase the available supply calculation used to determine the prices, and encourage more renewable energy generation.
PJM asked regulators for a six-month delay in its auction 2026/27 to deal with the complaint. The group of governors supported the delay.
Grid operator warned it would be a problem if government policies aimed at switching away from fossil fuel-fired electricity generation before adding clean electricity generation led to a shortage.
Jeff Shields, PJM's spokesman, said that "our state leaders are important voices. We appreciate their input in our efforts to find a balance between the need for a signal of investment for new generation and the need to keep the prices affordable for consumers." He added that "our states play an important role in the choices they make regarding policy decisions which directly affect supply and demand for our system". (Reporting and editing by Matthew Lewis in New York)
(source: Reuters)
