PJM and PA Governor Reach Auction Price Agreement
PA Governor Josh Shapiro filed a lawsuit with the FERC against PJM Interconnection in December. The complaint focused on how the PJM auction system is broken. As a result, PA electric choice prices were expected to rise this summer. Worse still, consumer rates all across the PJM service area were expected to rise by over $20 billion.
Recently, both parties settled. They have agreed on a price cap for the capacity auctions. However, we aren’t out of the woods yet. While this settlement agreement will curtail some of these rising costs, your electricity bill still might still go up this summer.
PJM Capacity Auction Settlement
According to the agreement, PJM’s upcoming capacity auction price cap was lowered. It drops from over $500 per megawatt-day to $325 per megawatt-day. The cap will apply to the next two auctions, in July 2025 and 2026.
The idea behind the agreement seeks to slow further price increases. However, PJM last capacity auction has already cost consumers. Last July’s auction resulted in capacity prices spiking to $14.7 billion; nearly seven times higher than before! As a result, electric bills for the 65 million people served by PJM will go up this June to cover that cost. And it’s all due to a power supply shortage.
PJM Grid Mismanagement Raising Electricity Rates
The settlement doesn’t address is how PJM is going to resolve the root issue of the costs increase. Prices spiked during this last auction for several reasons. But the main issue lies in how the PJM has been lining up power from generators. As older natural gas and coal power plants were retired, fewer power plants were being cleared to take their place. In April 2024, some 3,009 power projects sat waiting in the PJM connection queue. At one point, new projects faced a delay of 4 years.
PJM’s grid interconnection plan has long been criticized for being too slow. Clean energy groups and environmental organizations complained often that PJM chose to stall new grid connections instead of reforming. As February 16, 245.1 gigawatts of active power capacity are waiting for PJM approval to join the grid. As long as the approval lag continues, the more likely that electricity prices will rise.
Fight Rising Electricity Rates
Last July’s capacity auction’s results loom large for 13 states, including PA. Consumers all across the state will likely face rising electricity rates this summer.
For that reason, it’s never a bad time to shop for an affordable, fixed-rate electricity plan. And, it’s especially good to do now. That’s because prices tend to dip during the spring shoulder months. So don’t wait. Get started by reading reviews, compare plans, and find the right provider for you. Visit https://www.paenergyratings.com