Federal regulators late Monday approved price controls for PJM’s regional electricity market — with the hope of keeping consumer costs in check and ensuring wholesale power prices are high enough to lure generators and meet rising demand in the East.
The Federal Energy Regulatory Commission’s endorsement of price limits settles a protest by Pennsylvania Democratic Gov. Josh Shapiro against PJM Interconnection, the regional grid operator for 67 million people across 13 states. Shapiro had threatened to pull his state out of PJM if the grid manager didn’t get a handle on “runaway” power prices.
Prices that will be set through PJM-run auctions are designed as payments to power generation companies that guarantee supplies through the summer of 2028. After an auction last summer produced sky-high prices for future generation, Shapiro demanded that PJM cap the price, saving customers some $20 billion.
As a result, the ceiling for the upcoming PJM capacity auction is around $325 per megawatt-day from the current $500/MWd ceiling. PJM also added a floor price of around $175/MWd. PJM officials said the price floor was essential to attract enough electricity supply commitments from generators.
