Jeaneen Zappa, Executive Director of the Keystone Energy Efficiency Alliance (KEEA) and the Energy Efficiency Alliance of New Jersey (EEA-NJ), issued the following statement today on behalf of both trade organizations, addressing the PJM Interconnection Base Residual Auction (BRA) results released July 22, 2024:
PJM’s auction results mean that 67 million electric consumers in 13 states and the District of Columbia will continue to see rising electricity prices. While the BRA is only one component of the total price a consumer sees, we can trace a series of past PJM decisions that created this result.
Auctions were long delayed, kicking these increases down the road. PJM planning, complacently reliant on a past predictor of “flat demand”, failed to fully consider scenarios that include the shocking increases we’re now seeing for electricity demand from artificial intelligence data centers – which are heavily based in PJM’s territory. In addition, PJM’s well-known sluggish pace (and interconnection backlog) in advancing new renewable energy generation projects exacerbated the scarcity of power generation available to the Regional Transmission Operator. They also eliminated energy efficiency as an acceptable resource in the auction, discarding 7.6 GW of much-needed additional capacity. Lastly, PJM rightly adjusted its own rating of the reliability of natural gas plants as a source of power, particularly during extreme weather events. This “de-rating” played a significant role in the price increase, not the wrongly blamed retirement of coal-fired power plants.
PJM cannot continue to operate in what amounts to a private country club model where only members’ voices matter. PJM’s actions and business practices impact millions of businesses and consumers, yet those individuals – along with their utility commissioners and elected officials – continue to have little or no voice in the process of planning or pricing energy and ensuring a reliable grid.
KEEA & EEA-NJ thank Pennsylvania Governor Shapiro for his legal actions that led to an agreement with PJM, sanctioned by the Federal Energy Regulatory Commission (FERC), to establish a price cap for energy in this auction. Unsurprisingly, as noted in PJM’s press release on the auction, “The price came in at the FERC-approved cap, $329.17/MW-day (UCAP), for the entire PJM footprint. This price compares with $269.92/MW-day for the 2025/2026 auction for the RTO, except for the BGE and Dominion zones, which cleared at $466.35/MW-day and $444.26/MW-day, respectively.” Without this cap, the outcome for ratepayers would have been even worse.
We also thank the nine PJM state governors – including Governor Murphy, in addition to Governor Shapiro – who continue to share their concerns with PJM and voice support for fresh leadership and ongoing reforms.
Our key takeaway is that the supply of power is becoming tighter while the insatiable appetite for it continues to grow. That’s especially true in light of the enthusiasm from some federal and local officials who are setting their sights on boosting the growth of data centers without planning for how we’ll supply the power.
Advancing the 85 GW of power projects already languishing in the interconnection “ queue”, waiting to get approved by PJM, is critical to adding generation. These generation assets are faster to market and build-out in a period when accelerating the power supply is paramount. States, too, should examine their permitting systems to expedite the many already-PJM-approved renewable generation projects that are stuck facing state-level barriers.
The only direction we can go now is forward—towards long-overdue PJM reforms that prioritize affordability for everyday consumers in the PJM region. Energy efficiency services and investments will be crucial to creating and supporting that affordability. Our 70+ trade organization member businesses, who do energy efficiency work in Pennsylvania, New Jersey, and elsewhere, will continue to provide energy-saving services to consumers across all rate classes. Efficiency-friendly policy decisions and efficiency-oriented investments can help us take those services even further, helping to mitigate the energy cost crisis now affecting our region.