On July 30, the PJM Interconnection announced the results of its 2025/26 capacity auction, which revealed that costs will be roughly seven times greater than in 2024/25.   [Read more here.]

The total capacity bill for the region will increase from $2.4 billion to about $14.7 billion, which could increase retail power bills by as much as 29% starting mid-2025.

Following is a reaction from Tom Rutigliano, senior advocate with the Sustainable FERC Project at the Natural Resources Defense Council--

“The bill is suddenly due for an overreliance on fossil fuels and inadequate planning for a more affordable, diverse power grid in PJM. And customers throughout 13 eastern and midwestern states and D.C. will be the ones who pay the price.

“Make no mistake: this was foreseeable and preventable. This is what happens when regulators sideline a wealth of historically affordable clean energy resources waiting at their doorstep and the transmission needed to bring them online.

“For years, the largest grid operator in the eastern U.S. has all but refused to diversify its resource mix and bring new energy online, and instead opted to depend excessively on an aging fossil fuel fleet while ignoring its reliability failures.

“This sticker shock is a direct result of recent regulatory changes made to address those reliability failures.

“With so few gas alternatives online in PJM to absorb the shock, making up the difference is coming at a steep price that hard-working families and businesses in the region will pay – and revealing what a bad deal they had been getting for a supposedly reliable gas-run power system.

“Diverse power grids are critical for reliability, and now we see just how critical they are for affordability.

“With wind and solar only making up an abysmal two percent of resources in this auction, but the overwhelming majority of PJM’s project queue, it is clearer than ever that PJM needs to rapidly scale up new energy resources to protect customers and resilience.

“The cost of PJM’s interconnection delays has now reached billions of dollars. Leaders in PJM states must demand accountability and solutions from their grid operator before they have to pay billions more in the next auction just five months from now.”

Resource Links:

-- Pennsylvania’s Electric Grid Is Dependent On One Fuel To Generate 59% Of Our Electricity; Market Moving To Renewables + Storage  [PaEN]

-- PJM Makes Multiple Reliability-Focused Improvements To Prepare For Winter To Deal With 70% Natural Gas, Other Generator Nonperformance In 2022   [PaEN]

-- PJM Reports Natural Gas Power Plants Were Over Half The Forced Outages During Winter Storm Gerri In January; Special Procedures Used For Gas Generators Raised Questions About Market Impacts   [PaEN]

-- New NERC Winter Reliability Assessment Finds Elevated Risk Of Blackouts In Extreme Weather Conditions; Natural Gas Supplies Still Vulnerable To These Conditions With 'Devastating Consequences'   [PaEN]

-- US EIA Report Shows How Winter Storms Have Reduced US Natural Gas Production, But Disruptions Can Happen Any Time Of The Year   [PaEN]

Related Articles This Week:

-- 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]

-- Natural Resources Defense Council: The Cost Of Slow-Walking Clean Energy Can Be Seen In Latest PJM Electricity Prices  [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 - By John Quigley, Senior Fellow, Kleinman Center  [PaEN]

-- DEP Awards $15+ Million In PA Electric Grid Resilience Grants To Prevent, Shorten Power Outages In Rural Electric Systems; Fall Grant Round Planned  [PaEN]

-- DEP Awards $2.3 Million To Schools, Businesses, Local Governments Switching To Zero- Or Low-Emission Vehicles; Now Accepting Applications  [PaEN]

-- PA Solar Center, Philadelphia Solar Energy Assn., Partners Host Aug. 14 Webinar To Get Eligible Schools Ready To Apply For The New PA Solar For Schools Grants  [PaEN]

-- Allegheny County Health Dept. Accepting Applications For $5 Million In Local Climate Resiliency And Adaptation Project Grants [PaEN]

NewsClips This Week:

-- Utility Dive: PJM Capacity Auction To Lead To Double-Digit Rate Hikes For Exelon Utilities: CFO  [PECO]

-- Utility Dive: FirstEnergy Seeks Alternatives To PJM Capacity Market’s Dramatically Higher Prices To Bolster Power Supply

-- Meadville Tribune: National Fuel Natural Gas Rates Rising More Than 11% Aug. 1

-- Utility Dive: PJM Electric Capacity Prices Hit Record Highs, Sending Build Signal To Generators-- $14.7 Billion Up From $2.2 Billion In Last Auction

-- Bloomberg: PJM Interconnection Auction Results In Record Wholesale Electric Price Increases

-- Renewable Energy World: Energy Prices At PJM Capacity Auction Skyrocket 9x: Oh, That’s Not Good

-- Reuters: PJM Power Auction Results Yield Sharply Higher Prices

-- S&P Global: PJM Power Capacity Auction Clears At Record High Price Of $269.92/MW-Day For Most Of Footprint

-- Power Magazine: PJM Capacity Auction Prices Surge Over Nine-Fold, Signal Urgent Need For New Power Generation

-- RTO Insider: PJM Capacity Prices Spike 10-Fold In 2025/26 Auction

-- Bloomberg: Almost 20% Of Americans Face Prospect Of Higher Energy Bills

[Posted: July 31, 2024]

8/5/2024