Pa. Gov. Shapiro Reaches Agreement With PJM To Prevent Unnecessary Price Hikes, Save Consumers Over $21 Billion on Utility Bills

HARRISBURG, Pennsylvania, Jan. 29 -- Gov. Josh Shapiro, D-Pennsylvania, issued the following news release on Jan. 28, 2025:

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In December, Governor Shapiro filed a lawsuit with federal energy regulators to prevent energy price hikes on 65 million consumers, including 13 million Pennsylvanians.

Governor Shapiro's work to find a pathway to resolving this lawsuit with PJM has averted runaway prices and will save Pennsylvanians money on their electricity bills.

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Governor Josh Shapiro announced he has reached an agreement with PJM Interconnection on a plan to resolve his recent lawsuit and to save consumers over $21 billion over the next two years. In December, Governor Shapiro filed a complaint with the Federal Energy Regulatory Commission (FERC) against PJM Interconnection, criticizing flaws in PJM's capacity auction design that threatened to impose significant new price increases. The agreement will avoid historic price hikes on consumers across all 13 states PJM serves, including Pennsylvania.

Left unaddressed, PJM's next capacity auction scheduled for July 2025 would have resulted in billions in unnecessary energy costs for 65 million people across the region. The Governor worked with PJM to significantly lower the capacity auction price cap - from over $500/Megawatt-Day to $325/MW-Day - averting a runaway auction price that would have unnecessarily increased energy bills.

The Commonwealth is a leading producer of energy and the nation's largest exporter of electricity - nearly a century ago, Pennsylvania helped to found PJM, and today still serves as a generation backbone for the region. At the same time it has led this fight against unnecessary price increases on consumers, the Shapiro Administration is committed to meeting the need for new generation by getting more power projects built in Pennsylvania as part of an "all-of-the-above" energy strategy to create jobs, reduce emissions, and ensure safe, reliable, affordable power for Pennsylvanians for the long term.

"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," said Governor Shapiro. "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. My Administration will continue to work to ensure safe, reliable, and affordable power for Pennsylvanians for the long term."

PJM operates a capacity market, which means that operators are paid to commit to providing energy in the future. Over the last several years, demand for energy has risen rapidly but PJM has been slow to allow new power sources onto its grid - and as a result, PJM capacity prices have skyrocketed. PJM's 2025/26 capacity auction, held in July 2024, resulted in costs of $14.7 billion - an over 800 percent increase from the prior year.

The Governor pushed PJM to reduce their price cap, and a diverse coalition came together support the Governor's message, including four governors, energy and consumer advocates, and the Organization of PJM States (OPSI). The Shapiro Administration's energy leadership promises to save the PJM region over $21 billion on utility bills in the next two years.

PJM and the Shapiro Administration have agreed to a path forward for the complaint, subject to consultation with PJM members and the PJM Board of Managers. In order to avoid further delays to the auction schedule, PJM will soon seek a FERC order by proposing a cap and floor mechanism through an FPA section 205 filing with the FERC.

This resolution follows over a year of engagement with PJM. Governor Shapiro continues to repeatedly press for long-term solutions that address increasing costs, urging PJM to:

* Reopen their closed interconnection queue to get new projects online, like the restart of Three Mile Island in Pennsylvania;

* Rely on member states to help determine which projects are ready and to speed up project approvals like the Governor has done in Pennsylvania;

* Implement new best practices established by FERC in order to be better prepared in extreme weather scenarios and ensure affordable, reliable power year-round; and

* Reform the capacity market to more accurately reflect real world conditions, ensuring grid reliability while saving consumers money on their utility bills.

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Original text here: https://www.pa.gov/governor/newsroom/2025-press-releases/gov-shapiro-agreement-pjm-prevent-price-hikes-save-consumers-ove.html