Grid operator PJM faces a new complaint regarding power supply
Consumer advocacy group filed a complaint with PJM Interconnection. They claim that the U.S.'s largest grid operator unfairly awards record-high payments to power plants, driving up electricity prices for households and businesses.
The Federal Energy Regulatory Commission received a complaint on Monday, the second in recent times regarding PJM Interconnection’s capacity market auction for 2025-2026. This auction set prices that were over 800% higher than those of the previous year.
PJM leaders stated that the record-high prices were largely due to the soaring demand for power and the shrinking supply of fossil-fired generators as they retire.
In its complaint, the Joint Consumer Advocacy Group stated that "These clearing prices do not match market facts on the grounds." "PJM's current capacity market rules are unfair and unreasonable."
The group of consumer advocates, including the Illinois Attorney General's Office and the Maryland Office of People's Counsel as well as the New Jersey Division of Rate Counsel (and Office of the Ohio Consumers' Counsel), said that the rules governing PJM's auction of capacity should be altered.
A PJM spokesperson stated that the organization was reviewing this complaint and declined to comment.
PJM Interconnection compensates power plants for operating during times of high demand. The prices of the payments are set in annual auctions, using a set of evolving rules to determine these prices.
According to the complaint, capacity costs for consumers increased to $14.7 billion in the latest auction from $2.2 billion. According to the current PJM rules for the capacity market, it is estimated that the 2026/2027 ratepayer auction could see a surge in costs to as high as $37 billion.
PJM postponed the auction that was originally scheduled for December by six months in order to respond to a separate complaint filed against it by environmental groups including Sierra Club.
Paul Patterson, a New York-based analyst with Glenrock Associates LLC, said that there is a lot back and forth between the various parties to try to make the rules reflect their desired outcome.
PJM's market watchdog, as well as the governors from Pennsylvania, Illinois and Maryland, New Jersey, and Delaware, have all criticized the grid operator and called for change.
One of the changes suggested is to include in the auction power plants that are currently excluded due to special contracts known as RMR Agreements. (Reporting and editing by Alexandra Hudson, Stephen Coates, and Laila Kearney)
(source: Reuters)
