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.
Without intervention, these price spikes would have cost consumers billions in unnecessary energy expenses across Pennsylvania and other PJM-served states.
Governor Shapiro’s legal challenge and negotiations with PJM led to a major reduction in the capacity auction price cap:
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.”
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:
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.