Consumer Advocates Attempt to Shift the Blame on Power Prices

In a misguided attempt to lower electricity costs, ratepayer advocates from Illinois, New Jersey, and Maryland are pushing to “re-do” PJM Interconnection 's 25/26 capacity auction – almost ten months after results were announced. Not only does such a move misattribute the cause of rising costs, but it also deliberately ignores the very real role that these same consumer advocates have played in creating the problem they are now complaining about.  

 The competitive market auction structure was not the cause of higher prices in PJM’s 25/26 capacity auction. Instead, higher prices were an honest reflection of state policy decisions that are impacting the grid.

 For years, state laws and regulations have caused early retirements of baseload generation, blocked needed transmission and natural gas infrastructure, and created unnecessary barriers to bringing more generation capacity online.

 The headlines alone are a stinging indictment of just how proud lawmakers have been to stop development of new supplies that are now desperately needed:

 ·       NJ joins legal battle over interstate pipeline: In the state’s latest pipeline battle, the Murphy administration is joining seven other states in legally challenging a decision by a federal agency to approve an interstate natural gas pipeline, arguing the project is not needed. 

·       Illinois Governor Signs Bill Shutting Coal Plants for Good: Illinois Gov. J.B. Pritzker signed comprehensive climate legislation Wednesday that will make it the first state in the Midwest to shut down all of the state’s coal-fired energy plants by 2045.

 ·       State lawmakers encouraged by Governor Moore in transmission line fight: Since Governor Wes Moore voiced his "grave concerns" about the proposed Maryland Piedmont Reliability Project, several state lawmakers, who opposed the project, said they are encouraged his influence could help stop it.

 Consumer advocates have been at the forefront of supporting these same policies—opposing transmission projects, fighting investments in infrastructure, and torpedoing new generation. Indeed, PJM CEO Manu Asthana testified before Congress that it is public policy decisions that are largely driving generation retirements.

 The result? It can take up to 10 years to build new generation, while up to 30 percent of PJM’s installed capacity is at risk of retiring by 2030. Now, as electricity demand rises and the grid has insufficient resources to keep up, those same lawmakers and advocates are looking to shift the blame.

 New Jersey is a prime example of policy mismanagement increasing costs for residents. Despite the state's goal of having 11,000 megawatts of offshore wind by 2040, there are still no operational projects off the coast of New Jersey. None are even under active construction. Instead of incentivizing reliable and affordable generation, policymakers in New Jersey went "all in" on hypothetical resources that might be available while shutting down real and essential projects that could have helped meet today’s demand. 

 Why aren’t consumer advocates demanding accountability from state policymakers for enacting policies that hurt ratepayers and may shut off their lights? Perhaps it is time for consumers to make their displeasure heard to the parties who actually caused this problem.

 There is a consensus among industry leaders and grid operators about what can actually drive the kind of investment in new capacity that will lower prices: clarity and a reasonable degree of certainty for investors. Supply will respond to demand—but only if states let it.

Seeking to change the results of an auction long after the fact because you think it will garner public support only ensures that even fewer companies will ever see PJM as investable and further exacerbate the problem.

By seeking to re-do the 25/26 capacity auction now, these advocates are attempting to undermine market structures in ways that do nothing but make sure the problem won’t actually be fixed. It’s another way to kick the can down the road and avoid accountability without ever addressing the real problem.

Consumers deserve better.