PJM responds to Pennsylvania Governor’s complaint over power market rules

PJM responds to Pennsylvania Governor's complaint over power market rules

December 31, 2024. Reuters

Grid operator PJM Interconnection responded on Tuesday to a complaint from Pennsylvania Governor Josh Shapiro over power market rules, citing concerns about potential power shortages due to the fast-paced expansion of data centers.

Shapiro had filed a complaint with the Federal Energy Regulatory Commission on Monday, arguing that the largest U.S. power grid operator needs to change its market rules to avoid a potential surge in electricity costs.

"We have been warning for over two years of the prospect that parts of our country could run short of power during high demand periods," PJM said in a statement.

"This possibility has been growing, primarily as a result of state and federal policy decisions that are pushing generators to retire prematurely, and also due to unprecedented and rapidly growing data center construction," the grid operator added.

The company has sought permission from federal regulators to lower the market price cap and has proposed faster integration of new generation projects to mitigate issues such as power deficiencies during periods of high demand.

PJM, which serves nearly 65 million people across the U.S., has faced increased public scrutiny since July when it said that its annual capacity auction would lead to record-high payments to power plants within its system.

Republican Senate Majority Leader Joe Pittman (R-Indiana) Response to Governor Shapiro's FERC Complaint Against PJM

Shapiro's Lawsuit on Electricity Prices Rings Hollow

December 31, 2024

HARRISBURG - Senate Majority Leader Joe Pittman (R-41) issued the following statement in response to Gov. Josh Shapiro's recent announcement of his administration's action to 'defend Pennsylvanians against unnecessary increases in their electricity bills':

"Over 13 months ago the Commonwealth Court ruled the RGGI Electricity Tax violates our state Constitution. Yet Governor Shapiro refuses to accept the decision and continues to waste more taxpayer dollars appealing the decision to the Supreme Court. If the governor is truly committed to protecting consumers, he should start by dropping his own lawsuit in defense of a program destined to increase the cost of electricity by nearly a half billion dollars annually. Simply voicing support for an 'all-of-the-above' energy strategy while actively thwarting meaningful progress to move Pennsylvania forward by miring the energy marketplace in the six-year debate over the RGGI Electricity Tax is detrimental to the future stability of our Commonwealth's energy grid.

"Pennsylvanians have no doubt been forced to deal with the realities and pressures of higher energy costs, which cannot stand. A strong, reliable, and cost-effective energy portfolio across our Commonwealth requires embracing an all-encompassing strategy when it comes to the generation and distribution of power. Throughout the 2023-24 Legislative Session our Senate Republican Caucus prioritized advancement of meaningful legislation to help address rising costs for consumers of electricity. It is unfortunate that many of the measures were not supported by the Shapiro Administration.

"Pennsylvania being a leader in electricity production is key to energy independence and national security. With the new two-year legislative session about to begin, we have a renewed opportunity to lessen the pressures from higher electric bills. Our Senate Republican Caucus will continue to be staunch advocates for working families who are feeling the stresses of inflation. Responsible enactment of energy policies which balance development of our God-given natural resources with environmental needs remains our focus."

During the 2023-24 Legislative Session, the Senate passed the following bills to help alleviate the cost of energy for Pennsylvanians:

• Senate Bill 1058 - Abrogates, and thus eliminates, the Regional Greenhouse Gas Initiative (RGGI) tax regulation on Pennsylvania consumers.
• Senate Bill 269 - Provides for the elimination of the gross receipts consumer tax on energy in the Commonwealth, along with an historic reduction in the personal income tax.
• Senate Bill 832 - Establishes the Independent Energy Office (IEO) within the Commonwealth to provide more accurate and reliable information to the public on energy development and production. Additionally, the bill provides for a new bi-partisan board to accelerate permit review and approval for large scale energy projects, along with regulatory waivers for large scale energy generation projects.
• Senate Bill 350 - Creates the Permit Administration and Economic Development Act to fast track and streamline the management, tracking, and oversight of permit applications by state agencies.
• Senate Bill 188 - Amends the Regulatory Review Act to require the General Assembly to approve all economically significant regulations placed on the public by the Executive Branch.
• Senate Bill 190 - Amends the Regulatory Review Act to require effectiveness reviews for all economically significant regulations that have been in effect for three years or more.
• Senate Bill 198 - Provides more clarity regarding permit appeals from decisions made by the Department of Environmental Protection.
• Senate Bill 831 - Establishes the legal and regulatory framework for potential carbon dioxide capture and sequestration.
• Senate Bill 1017 - Reauthorizes the Responsible Utility Consumer Protection Act to provide utility payment options while balancing the needs of all consumers for a reliable energy distribution system.
• Senate Bill 143 - Requires local governments to keep all energy source options open to consumers.

Energy Legislative Oversight by the Senate during the 2023-24 Legislative Session:

• The Senate Environmental Resources and Energy Committee held two hearings on the current state of the PJM grid. The hearings included testimony from PJM, the organization that manages the mid-Atlantic power grid, the Pennsylvania Public Utilities Commission (PUC), and energy industry experts. The panels highlighted significant concerns regarding the resource adequacy projected for the next three to five years. They emphasized how the PJM electric system is interconnected, and actions taken by any one state can have resounding and immediate impacts on neighboring states. These challenges are amplified when generation is retired, and new generation cannot keep pace with what is being retired.
• The Senate Environmental Resources and Energy Committee also held a hearing on Pennsylvania Grid Reliability, briefing the Committee with testimony from power generators and industry experts, including PJM providers. The briefing testifiers discussed current trends in the PJM market and explained that demand is rising faster than historic rates.The testimony acknowledged this reality and how the capacity market decline, directly impacted by RGGI, is clearly hastening plant closures in Pennsylvania without regard to the reliability implications.

Link: PJM responds to Pennsylvania Governor's complaint over power market rules

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