Energy Association of Pennsylvania (EAP) President and CEO Andy Tubbs said today that PJM Interconnection’s wholesale auction for the 2027–28 delivery year continues a troubling trend of sharply rising costs for families and businesses without adding meaningful new power generation to meet rapidly growing energy demand.
“For three consecutive auctions, capacity prices have skyrocketed, with the latest resulting in $16.4 billion in payments to existing generators. Yet even at these record-level prices, the auction fell short of PJM’s reliability requirement and added minimal new generation. Customers are paying more, but the market is still failing to deliver enough new supply to keep pace with growing demand.
“While some are raising concerns about new projects that will require energy, Pennsylvania’s economic growth is already driving record demand and stretching supplies to the limit. We cannot allow the lack of new generation to threaten reliability, drive up monthly costs for families and businesses, and squander economic opportunities. Make no mistake: Without enhanced procurement and practical tools to bring new generation online, Pennsylvania runs the risk of facing the same affordability and reliability challenges already hitting customers in New Jersey and Maryland.”
— Andy Tubbs, president and CEO, Energy Association of Pennsylvania
PJM Interconnection is the regional transmission organization that operates the grid and wholesale auctions for all or parts of 13 states and Washington, D.C., including Pennsylvania. Auctions are held three years in advance.
Pennsylvania’s electric distribution companies (EDCs), commonly referred to as utilities, do not profit from these auctions. Instead, the significant increase in payments resulting from recent PJM auctions are paid to existing generation suppliers and ultimately collected in monthly customer bills. Unlike EDCs, competitive generators are not regulated by, nor directly accountable to, the commonwealth for ensuring adequate long-term supply to meet Pennsylvania’s growing energy needs.
Pennsylvania’s EDCs must follow strict regulatory requirements to deliver safe and reliable energy to more than 8.7 million residential, commercial and industrial customers. The Energy Association of Pennsylvania supports competitive energy markets when they work but believes Pennsylvania must be open to pragmatic solutions when markets fall short. This includes enhanced procurement flexibility and exploring limited, carefully regulated authority for EDCs to develop generation resources as a backstop to protect reliability.
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About EAP
The Energy Association of Pennsylvania (EAP) is a trade association that represents and promotes the interests of regulated electric and natural gas distribution companies operating in Pennsylvania.
Contact: David La Torre