After years of climbing electric prices nationwide, customers in the United States’ largest power market are about to get squeezed harder.

Last month, PJM, which coordinates the flow of electricity for an area that includes all or parts of 13 states, including part of Kentucky, stretching from the Midwest to New Jersey plus the District of Columbia, released capacity auction results that hit a record high.

The auction, held by the regional transmission organization to ensure there’s enough power generation to meet demand spikes, such as during severe weather and other grid emergencies, produced a price of nearly $270 per megawatt day for much of the footprint (with some areas spiking much higher) compared to nearly $29 per megawatt day during the last auction. That increase, more than 800%, will cost customers across the region of 65 million people nearly $15 billion for the period covered by the auction (June 1, 2025 to May 31, 2026) the Maryland Office of People’s Counsel noted in a report released last week.

The costs will not hit equally across the PJM footprint, however, since utilities that own and operate their own power plants, like Virginia’s Dominion Energy, are both sellers and buyers in the capacity market, which will blunt the impact for their ratepayers. But Exelon, a company that owns six so-called “wires-only” utilities with 10.5 million customers in PJM states, expects the capacity prices to trigger double-digit rate increases for some customers, Utility Dive reported.

What makes the capacity costs tougher to swallow is that much of the increase can be laid at the feet of planning shortcomings, market design failures and governance problems at PJM, the organization’s critics contend.

“The tools to enhance reliability are in PJM’s hands,” said Clara Summers, campaign manager for Consumers for a Better Grid, a watchdog group that is part of the Citizens Utility Board of Illinois. “Instead PJM is dragging its feet on the clean energy transition and doing everything it can to keep fossil fuel plants online and ultimately ratepayers are the ones who suffer from this shortsightedness.”

‘All sorts of problems’

In particular, critics point to PJM’s long delayed interconnection queue, which is the waiting list for generation projects looking for permission to connect to the grid. They say that even as PJM complains about fewer power plants entering its capacity auction and the increasing pace of old generating station retirements, it is seeking exemptions to a landmark new federal rule intended to streamline interconnection processes and get new power resources online quickly.

“PJM is the place with the most acute need for interconnection reform and they’re refusing to do what they’ve been told to do on it rather than be proactive on it,” said Tom Rutigliano, a senior advocate at the Natural Resources Defense Council who focuses on PJM.

Jeff Shields, a PJM spokesman, said the organization has been working hard to fix its interconnection process and clear the backlog. He pointed out that many projects that have cleared the queue still aren’t getting built because of supply chain, financing or permitting problems that are beyond PJM’s control.

“We are not arguing about whether we need queue reform, we have only taken issue with some details,” he said.

David Lapp, Maryland’s people’s counsel, an advocate for the state’s residential utility customers, said interconnection delays are just part of the problem at PJM.

Transmission costs — because of a lack of competitive bidding of projects and a failure to plan for the long term, watchdogs argue — have also climbed over the past decade.? And a deficient process for managing power plant retirements, along with market errors, have also hurt customers, Lapp said.

”Our customers are bearing the consequences of all sorts of problems at PJM, whether they be problems with the market structure, problems with the interconnection queue, problems related to planning failures or just mistakes,” Lapp said in an interview with States Newsroom. “PJM really needs to start taking the interest of customers more seriously into account in terms of how it develops its policies.”

How the retirement of Brandon Shores, a Talen Energy coal-fired power plant southeast of Baltimore, has been handled, exemplifies a lot of what’s wrong with PJM, Lapp added. Lapp and others, including members of Maryland’s congressional delegation, say PJM was caught flat-footed by the plant’s retirement, which should have been foreseeable given the limited amount it was running, a deal with the Sierra Club to quit burning coal and financial troubles for its operating company. PJM counters that it was told the plant would switch to burning oil and continue running.

“It is not reasonable to expect PJM to have anticipated the imminent deactivation of the Brandon Shores units when numerous public statements and direct conversations between PJM and Talen all supported the notion that Brandon Shores was on a path to remain online, albeit using a different fuel source,” PJM President and CEO Manu Asthana wrote in a December letter to the Sierra Club,

‘How much sense does that make?’

Regardless, PJM now has pushed for an urgent suite of transmission projects that will cost Maryland ratepayers about $800 million to bring in enough power to make up for the loss of the Brandon Shores station and another nearby Talen plant, Wagner, that is also retiring. PJM will also keep both plants running under what are known as“reliability must run” arrangements that could cost Maryland ratepayers $629 million through 2028, the People’s Counsel report says, and comes with no guarantee they will actually be able to produce power when called upon. It also means the plants will exit the capacity market, which is designed to increase prices as energy supply tightens to encourage more generation sources to enter the market. “The logic was that you want to treat them as gone to send a price signal for new entry,” Rutigliano said. But even if a new generation source wanted to take advantage of the high capacity prices in the zone affected by the plant closure, the interconnection queue delays mean it could be years before it can participate in the auction.

“With PJM’s interconnection process so far behind that simply doesn’t work,” Rutigliano said. “Price signals are worthless if you’ve got a six-year delay in responding to them.”

And since PJM has already decided on a transmission solution to make up for the plant’s retirement, forcing customers to bear the high capacity prices doesn’t make sense, Rutigliano said.

“They exclude them from the market to get a high price signal but build transmission to ease the load pocket. Those are contradictory,” he said.

The upshot is that Talen gets a windfall (the Office of the People’s Counsel report found the company’s revenues for the 2025-2026 delivery year are $360 million higher than what they would have been had Wagner and Brandon Shores participated in the capacity market) and electric customers in Maryland will be paying extra for plants that may not run much at all. They will also be paying extra for the loss of that plant to the capacity market in order to create a market signal that won’t matter because of the transmission solution PJM has already decided upon, which will also be paid by local customers. Lapp called it a “triple whammy.”

“We have the illogical situation where customers are paying big dollars for a plant that is not going to run almost all the time,” Lapp said. “They still have no performance obligation. There are no consequences if PJM says ‘We’re hitting a peak time. We need you to run.’ And Talen says ‘We can’t.’ …? How much sense does that make?”

Shields, the PJM spokesman, says PJM will continue working to improve markets, transmission planning and generator interconnection. But he added that, of the PJM states, Maryland has the second-fewest projects in the queue over the next few years.? “We encourage Maryland policymakers to analyze why and what can be done to encourage development,” Shields said. “There is no debate – Maryland needs energy infrastructure. Maryland needs generation to produce power for and transmission to move power to the customers who need it. The Maryland Office of People’s Counsel knows all of this to be true, and these critical issues deserve a better discussion than ongoing exercises in finger pointing.”

Seeking variances?

Particularly frustrating for PJM reformers are the exemptions it is seeking to a new Federal Energy Regulatory Commission rule to speed the connection of new power resources to the grid, which seems counterintuitive for an organization that has worried about having enough power to meet demand. PJM did begin its own interconnection reforms prior to the FERC order, and its request for variances indicates it wants to stick to that plan rather than conform completely to the new FERC rules, per a coalition of environmental and consumer organizations that are challenging the request before the commission.

“The interconnection queue in PJM is among the longest in the nation, whether measured by the number of projects, total electric capacity, or how long projects languish awaiting studies,” the groups wrote in a FERC filing, noting that PJM won’t review new interconnection applications until 2026 at the earliest. “At the same time, PJM is sounding the alarm about a reliability crisis because new generation cannot come online quickly enough to replace retiring power plants. To accelerate interconnection and bring new generation online to avoid reliability challenges from foreseeable retirements, PJM should welcome Order No. 2023’s reforms with open arms. Instead, PJM resists reform to its interconnection process.”

Mainly PJM is seeking permission for increased study timelines and a laxer penalty structure? and wants to sidestep reporting requirements on how it evaluates grid-enhancing technologies, which can save time and money over traditional transmission solutions. It also wants to avoid the requirement to realistically consider how energy storage resources will affect peak load.

Grid-enhancing technologies have been used for years elsewhere in the world to get more out of existing power systems and in many cases are faster and cheaper than building new transmission lines, but they’ve been slow to catch on in the U.S., in part because American utilities make more money by building big, expensive projects rather than more cost-effective solutions, proponents have said.

PJM wants out of a requirement to demonstrate that it has considered those technologies, said Katie Siegner, a manager who works on markets and electric grids at the Rocky Mountain Institute, a nonprofit focused on decarbonization.

“What they’re saying is, ‘We already consider them but don’t make us show you how,’” she said.

The other major exemption PJM wants deals with battery storage resources and what grid upgrades are needed to accommodate them. Some grid operators, including PJM, want to continue to use a worst-case assumption — that the batteries will charge at times of peak electric demand. That flies in the face of the economic model for grid-connected batteries, which seek to charge when prices are low and discharge when they spike.

“Assuming that storage will charge during a time of peak load is one of those worst-case conditions even though it’s antithetical to the action it will take in the market,” Siegner said. And even if PJM was concerned about that happening, it could write a prohibition into an interconnection agreement, rather than requiring storage developers to pay for expensive grid upgrades that might never be needed, she added.

“It’s just a nonsensical way of studying these resources that has to change,” Siegner said.

The bigger problem, said Summers of the Citizens Utility Board, is that at PJM, fossil fuel generators, big utilities and transmission companies hold a lot of sway.

“Many of these companies came of age in the fossil fuel era and their incentives are to try to prevent the fossil fuel transition or make it as expensive as possible. PJM has a pattern of dragging its feet on the energy transition,” Summers said.

Indeed, how PJM is governed and how stakeholders are voting in lower level meetings is drawing increasing scrutiny from state lawmakers. Four blue state governors with decarbonization goals also recently called for a “robust process for states to engage with PJM” on planning decisions.

And for many of PJM’s critics, the fact that projects have made it through the queue but haven’t gotten built doesn’t excuse the mess the interconnection process has become.

“PJM must take responsibility for its role in establishing and maintaining an effective interconnection process,” Siegner said. “The faster that interconnection requests are processed, the easier it is to get financing and navigate supply chain hurdles. It’s a lot harder if you’re waiting in the queue for five years and you have no idea what your network upgrade costs will be.”