The high price of eggs is the hot topic in grocery stores and at kitchen tables these days, the latest illustration of how the cost of living weighs on people. But most people here in Pennsylvania are not yet aware of the next blow to family budgets that is likely coming their way: higher electricity bills.
PJM Interconnection, a largely unknown company that manages the electrical grid for 65 million people in Pennsylvania and all or part of a dozen other states, has set the stage, through poor planning and faulty decision-making, for electricity bill increases of 10-20% starting this June. Increases for businesses are expected to be even higher, reaching 30%.
What, you might ask, is PJM? And how can this organization I didn’t even know existed have such an impact on my family finances?
PJM is a regional transmission organization, responsible for getting electricity to where it’s needed, when it’s needed. That means managing the construction and upkeep of large electric transmission lines and deciding which large energy generators, from gas plants to nuclear reactors to solar and wind farms, get built and connected to the grid. PJM also holds auctions to purchase energy from those generators so that there is sufficient power supply to meet expected demand in future years.
Unfortunately, PJM has been struggling recently with a changing energy landscape. Demand for electricity is rising, driven largely by electricity-devouring data centers, including those used for cryptocurrency and artificial intelligence (AI). Extreme weather, which is now more frequent and more intense thanks to climate change, is increasingly straining the electric grid.
PJM has stumbled in facing these challenges, starting with its dysfunctional process for connecting more energy sources to the grid. There are about 2,000 projects waiting in line for approval, with wait times lasting several years. The backup has gotten so long that PJM stopped accepting additional projects in 2022. About 95% of the projects waiting to connect are solar, wind, energy storage, and other clean energy projects.
The result is that desperately needed projects are not getting completed. That means higher costs. In PJM’s most recent auction to purchase long-term energy, prices jumped seven-fold over the prior auction. Those costs will get passed along to families and businesses in their electric bills just as the heat of summer arrives.
READ: What’s going on with the electrical grid operator PJM?
It also means our region will continue its over-reliance on more expensive, dirtier, and less reliable natural gas. Less than 5% of PJM electricity is generated from clean energy right now, a small fraction of what some other regions produce.
Thankfully, Governor Josh Shapiro stepped in to prevent more electric bill price hikes and keep the lights on for millions of Pennsylvania households and businesses. He filed — and won — a lawsuit against PJM, demanding that it change its process for future auctions to stop its continued overpayment for power. That will limit the size of future price hikes, but will not stop the more imminent increase. He also is calling on PJM to clear its huge backlog of projects, mostly clean energy, that are seeking to connect to the grid.
Though the governor’s successful suit is an important victory for consumers, the fundamental flaws in PJM’s governance and grid management that contributed to our current energy problems remain.
Proof of that comes from a recent PJM plan to let 50 power projects, many of them likely to be costly gas-fired plants, jump the line to connect to the grid ahead of the many clean energy projects that have been waiting years for approval. While discriminating in favor of fossil fuels, the plan also does not ensure that its favored projects will be completed in time to meet the anticipated electricity reliability concerns PJM claims it can address. It should come as no surprise that this plan will benefit powerful energy companies and fossil fuel interests that disproportionately drive PJM’s decision-making.
There is a better, simpler way for PJM to help head off future electricity prices while making sure that the power is there when we need it. That starts by quickly clearing the backlog of clean energy projects that have long been waiting for approval. If PJM refuses, it may be time for Pennsylvania and other states in the region to seriously consider withdrawing from PJM to pursue other grid management options that can lead to lower electricity bills and a more stable electrical grid.
