Governor Shapiro Secures $21 Billion in Energy Savings for Consumers

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In a landmark agreement with PJM Interconnection, Pennsylvania Governor Josh Shapiro has successfully blocked an impending $21 billion increase in energy costs that would have impacted 65 million consumers across 13 states. This resolution follows Shapiro’s lawsuit against PJM, which was filed with the Federal Energy Regulatory Commission (FERC) in December, challenging flaws in PJM’s capacity auction design that would have caused electricity prices to surge.

What Was at Stake?

PJM operates a capacity market, which ensures that power providers commit to generating electricity for future use. However, PJM’s slow process for approving new energy sources has resulted in soaring capacity prices, driving unnecessary cost burdens on businesses and residents.

  • PJM’s 2025/26 capacity auction (held in July 2024) resulted in $14.7 billion in costs—an 800% increase from the previous year.
  • The next auction in July 2025 was expected to bring even steeper price hikes if left unchecked.

Without intervention, these price spikes would have cost consumers billions in unnecessary energy expenses across Pennsylvania and other PJM-served states.

How the Agreement Saves Consumers Billions

Governor Shapiro’s legal challenge and negotiations with PJM led to a major reduction in the capacity auction price cap:

  • Original cap: Over $500/MW-Day
  • New cap: $325/MW-Day

By setting a lower price ceiling, this agreement prevents runaway costs in future auctions, ultimately saving over $21 billion in utility costs over the next two years.

Governor Shapiro shared: 

“When PJM’s next auction was set to result in historic price hikes, I filed a lawsuit to stop this price hike on consumers and defend Pennsylvanians. PJM did the right thing by listening to my concerns and coming to the table to find a path forward that will save Pennsylvanians billions of dollars on their electricity bills.”

A Push for Energy Reform

The agreement is not just about preventing short-term price hikes—it also lays the groundwork for long-term energy reforms that address grid reliability and energy affordability.

The Shapiro Administration has called on PJM to:

What Comes Next?

PJM and the Shapiro Administration’s agreement is now subject to consultation with PJM’s Board of Managers and its member states. PJM will soon submit a formal proposal to FERC to codify the new cap and floor mechanism in its pricing structure.

This resolution marks a significant win for consumers, energy advocates, and state leaders who pushed back against soaring energy costs. It also reinforces Pennsylvania’s leadership in the energy sector, ensuring that affordable, reliable, and sustainable power remains a priority in the region.

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