Urgent Call for Change in PJM Pricing Process

NEW YORK (Reuters) – A group of five governors on Tuesday urged PJM Interconnection, the largest U.S. grid operator, to change the process it uses to determine the price paid to power plants after record-high prices awarded in its last auction.

The most recent PJM capacity auction resulted in prices that were nearly 10 times the previous year, attributed largely to shrinking power supply and rising electricity demand.

These prices raised concerns about swelling power bills for everyday homes and businesses in PJM's territory, leading environmental groups to file a complaint against PJM's pricing process.

The capacity auction results will cost homes and businesses in the 13 states and the District of Columbia that PJM serves $14.7 billion, the governors of Pennsylvania, Illinois, Maryland, New Jersey, and Delaware stated in a letter to the grid operator.

> "Urgent action is needed to prevent customers from paying billions more than is necessary," the group emphasized.

These governors urged PJM to broaden the number of power plants in its auction, which could help increase supply calculations for pricing, encourage more renewable power generation, and lower the capacity price cap among other requests.

PJM has requested a six-month delay in its 2026/27 auction to address the complaint against it, and the group of governors expressed their support for this delay.

PJM stated it had continuously warned that government policy measures aimed at shifting away from fossil-fired power generation could lead to a supply crunch before new clean electricity generation is in place.

> "Our state leaders are critical voices and we appreciate their input as we work to balance the need for an investment signal for new generation with the need to keep prices affordable for consumers," said PJM spokesman Jeff Shields. He added that the states also play a critical role in the policy choices that directly impact supply and demand on the system.