Regulators approve Shapiro administration settlement to halt ‘runaway’ electricity prices

Federal regulators approved limits on the maximum and minimum prices that electricity generators are paid to ensure an adequate energy supply as part of a settlement between Pennsylvania Gov. Josh Shapiro’s administration and the region’s electrical grid operator.

In a unanimous decision Monday, the Federal Energy Regulatory Commission approved a cap on prices that Shapiro claims will save consumers about $21 billion on electricity bills over the next two years.

The decision came as the Pennsylvania Public Utilities Commission is set to hold a hearing Thursday in Harrisburg where it will hear testimony on the impact of artificial intelligence and projects such as Amazon Web Services’ plan to build a massive data center in northeast Pennsylvania.

Fueled by increased electrification of transportation, heating and industry combined with the proliferation of electricity intensive data centers, demand for electricity has surged in recent years. Meanwhile, the ability of electricity generators to connect new sources of power to the grid has been stalled by a failing review process as the number of applications has surged.

PJM Interconnection, which operates the electricity grid for Pennsylvania and all or part of 12 other states, holds auctions every year in which electricity generators bid to supply electricity capacity during demand spikes, such as during severe weather and other grid emergencies.

The auction last year (for 2025-2026 capacity) 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.

Under the price limits FERC approved Monday for 2026-2027 and 2027-2028, PJM will reduce the maximum auction price from $500 per megawatt-day to $325 per megawatt-day and set the minimum price at $175 per megawatt-day. A megawatt-day is roughly enough electricity to power 400 to 900 homes for 24 hours, according to the Nuclear Regulatory Commission.

That means that although consumers will see energy prices increase up to 20% for some utilities this summer, the price limits will avert what the Shapiro administration predicted would have been a runaway auction price that could have tripled energy costs.

“My Administration worked with FERC and PJM to find a path forward that will save Pennsylvanians billions of dollars on their electricity bills. I will continue to work to ensure safe, reliable, and affordable power for Pennsylvanians for the long term,” Shapiro said in a statement.