PA Environment Digest Blog: Gov. Shapiro: FERC Approves Settlement With PJM To Prevent Unnecessary Prices Hikes, Save Consumers Over $21 Billion On Electric Bills

On April 22, Gov. Josh Shapiro announced the Federal Energy Regulatory Commission has approved his settlement with PJM Interconnection, resolving the Governor’s lawsuit against PJM’s price hikes and saving consumers over $21 billion over the next two years.

Left unaddressed, PJM’s next capacity auction scheduled for July 2025 could have tripled energy costs for 65 million people across the region.

In December 2024, Governor Shapiro filed a complaint with FERC against PJM Interconnection, criticizing flaws in PJM’s capacity auction design that threatened to impose significant new price increases.

The Governor worked with PJM to reach an agreement in January to significantly lower the capacity auction price cap by 35 percent, averting a runaway auction price that could have unnecessarily increased energy bills.

“When PJM’s next auction was set to result in historic price increases, I took action to stop this price hike on consumers and defend Pennsylvanians,” said Governor Shapiro. “My Administration worked with FERC and PJM to find a path forward that will save Pennsylvanians billions of dollars on their electricity bills. I will continue to work to ensure safe, reliable, and affordable power for Pennsylvanians for the long term.”

The Commonwealth is a leading producer of energy and the nation’s largest exporter of electricity – nearly a century ago, Pennsylvania helped to found PJM, and today still serves as a generation backbone for the region.

While fighting against unnecessary price increases on consumers, the Shapiro Administration remains committed to meeting the need for new generation by getting more power projects built in Pennsylvania as part of the Governor’s “Lightning Plan” to create jobs, reduce emissions, and ensure safe, reliable, affordable power for Pennsylvanians for the long term.

PJM operates a capacity market, which means that electric generators are paid to commit to providing energy in the future.

Over the last several years, demand for energy has risen rapidly but PJM has been slow to allow new power sources onto its grid – and as a result, PJM capacity prices have skyrocketed.

Governor Shapiro pushed PJM to reduce their price cap, and a diverse coalition came together to support the Governor’s message, including four governors, energy and consumer advocates, and the Organization of PJM States (OPSI).

[Utility Dive reported FERC approved a price cap of $325/MW-day and a floor of $175/MW-day in the settlement.

[PJM's last capacity auction in July 2024 produced a wholesale price of $269.92/MW-day for delivery in 2025-26, a 933% increase over the $28.92 MW-day cost for delivery in the 2024-25 auction. Read more here.]

The Shapiro Administration’s energy leadership promises to save the PJM region over $21 billion on utility bills in the next two years.

Governor Shapiro continues to repeatedly press for long-term solutions that address increasing costs, urging PJM to:

-- Speed up their stalled interconnection queue to get new projects online, like the restart of Three Mile Island in Pennsylvania;

-- Rely on member states to help determine which projects are ready and to speed up project approvals like the Governor has done in Pennsylvania;

-- Implement new best practices established by FERC in order to be better prepared in extreme weather scenarios and ensure affordable, reliable power year-round; and

-- Reform the capacity market to more accurately reflect real world conditions, ensuring grid reliability while saving consumers money on their utility bills.

Click Here for the Governor’s announcement.

NewsClip:

-- Utility Dive: FERC Approves PJM Interconnection Electricity Capacity Auction Price Cap, Floor [Negotiated with Gov. Shapiro]

Resource Links - PJM Issues:

-- Gov. Shapiro Reaches Agreement With PJM To Prevent Unnecessary Price Hikes And Save Consumers Over $21 Billion On Utility Bills [PaEN]

-- PA Senate Republican Leader: ‘Every Consumer Of Electricity In This Commonwealth Is Going To Pay More;’ ‘What You’re Going To Face Is Going To Be Really Unpleasant’ [PaEN]

-- Gov. Shapiro Threatens To Pull Pennsylvania Out Of PJM If It Does Not Protect Consumers Against Soaring Power Prices [PaEN]

-- Gov. Shapiro, Joins 4 Other Governors To Call On PJM To Reform Its Electric Generating Capacity Auction Rules To Prevent Billions Of Dollars In 'Unnecessary’ Costs To Their Residents, Businesses [PaEN]

-- PJM Electricity Auction Price 9 Times Higher Than Previous Auction-- $269.92/MW-Day For 2025/26 Delivery Compared To $28.92/MW-Day In 2024-25; Extreme Weather Risk Big Factor [PaEN]

-- PennFuture: Dramatic PJM Electricity Price Increases Due To Forced Outages Of Gas Power Plants; Huge Backlog Of New Generation Projects; Demand Growth Driven By Data Centers, Cryptocurrency Mining [PaEN]

-- Kleinman Center For Energy Policy: The High Price Of Failing To Transition To Clean Energy In PJM Footprint; Next PJM Auction Is In December [PaEN]

-- PJM, Electric Grid Operators Recommend Additional Steps To Overcome Vulnerabilities In Natural Gas Infrastructure To Ensure More Reliable Grid Operation [PaEN]