Nine Governors Demand Change at PJM Interconnection Amid Electric Cost Concerns

CHICAGO, IL — Nine governors representing most electric customers in the PJM Interconnection region are calling for increased state involvement in the organization’s leadership. They seek to fill two vacant board seats amid growing concerns over rising electricity costs and the grid operator’s reliability.

The letter, sent to PJM’s board, highlights a significant loss of trust. The governors noted that PJM’s failures in connecting new energy resources efficiently and in planning for long-term transmission have economically impacted their states. They worry this inefficiency has led to the loss of thousands of jobs and billions of dollars in investments.

This communication comes a year after PJM’s total capacity auction costs soared from $2.2 billion to $14.7 billion. Consumers in some states could see electric bill increases of 10% to 20%. To counter these rising costs, several states have enacted measures, while others are considering leaving PJM altogether.

The governors—who include leaders from Delaware, Illinois, Kentucky, Maryland, Michigan, New Jersey, Pennsylvania, Tennessee, and Virginia—expressed their frustrations with PJM’s management, characterizing its response as inconsistent and plagued by internal conflicts. They referenced the recent termination of two board members and the planned departure of CEO Manu Asthana at the end of this year.

State officials, including Senate President Nicholas Scutari and General Assembly Speaker Craig Coughlin of New Jersey, voiced strong support for the governors’ initiative, emphasizing the need for state representation in decision-making processes regarding energy prices.

Board Chair David Mills acknowledged the governors’ letter and invited them to discuss their concerns during an upcoming PJM Members Committee meeting on July 23. He defended PJM’s operations, citing efforts made to cap capacity prices and requiring certain power plants to participate in capacity auctions to address state issues.

As PJM prepares to unveil the results of its latest capacity auction, analysts at ClearView Energy Partners reported that while proposals for state independence are being debated, it remains unlikely that states will leave PJM. They highlighted the political pressures lawmakers face amid rising energy prices and the need for effective consumer advocacy.

PJM operates the electricity grid and wholesale power markets for 13 states and the District of Columbia, and its forthcoming decisions may significantly impact millions of Americans.