Shapiro joins bipartisan governors demanding leadership reform at PJM Interconnection

Gov. Josh Shapiro (Michael Rubinkam/Associated Press)

By Peter Hall, Pennsylvania Capital-Star

July 24, 2025

They said mismanagement of the region’s electric grid has cost thousands of jobs and billions in investments.

Gov. Josh Shapiro joined a bipartisan group of leaders in nine states who called for more input on electricity grid operator PJM Interconnection’s governance. The move came as PJM announced a hike in energy costs for the second year in a row.

Clean energy experts said the surging prices for electricity to meet the 13-state PJM region’s peak demands is a clear signal for generators to build new capacity, especially renewable sources such as wind and solar farms.

PJM, however, has been slow to grant approvals. Facing an onslaught of new energy projects seeking permission to connect to the grid, it closed its queue to new applications in 2022.

“When prices go up, it’s meant to send a signal to energy developers: ‘We need more supply.’ But at the same time PJM is holding up a big red STOP sign to energy developers,” Jon Gordon, policy director at Advanced Energy United, said in a statement.

And as demand for electricity increases with the increased electrification of transportation and industry, combined with the proliferation of power-hungry data centers driven by advances in artificial intelligence, consumers feel the pinch.

“With the queue closed, new energy projects in the region can’t get in line to connect to the transmission grid, meaning households and businesses are paying for a price signal that the market can’t even respond to,” Gordon said.

The elimination of tax credits for renewable energy sources in the budget reconciliation act President Donald Trump signed earlier this month and his executive order to end federal agencies’ preference for wind and solar power would make it more difficult to respond to the supply crunch, said Sharon Pillar, executive director of the Pennsylvania Solar Center, which works to extend the benefits of solar power across the state.

That leaves the grid more dependent on large power stations.

“Solar power, batteries, and energy efficiency measures have been proven to help reduce this peak energy usage, keeping prices down for all consumers by reducing the amount of expensive (and dirty) power needed from these generators,” Pillar said, noting the technology was vital to preventing blackouts on New England’s grid during a recent heatwave.

As demand has increased, PJM said, existing power plants have been retired as a result of federal and state policies to decrease the use of fossil fuels. It has approved 46,000 megawatts of new generating capacity. But, the project’s owners have been slow to move forward due to factors including the availability of equipment, financing challenges and state and local permitting, PJM said in a statement.

Shapiro and Republican and Democratic governors from nine states sent a letter to the PJM Board of Governors last week saying the inability of the organization to efficiently connect new generating capacity and conduct long-term planning has cost the region thousands of jobs and billions in new investment that have gone elsewhere.

“It is long past the time for real grid reforms that allow our region to compete at the speed of business and build a system that delivers affordable, reliable power for the people and businesses PJM serves,” Shapiro said in a statement last Thursday. “I am hopeful that this historic collaboration between the PJM states will provide the opportunity to foster a stronger, collaborative partnership between PJM and the 67 million people it serves to chart a strong energy future together.”

The letter said PJM’s deficiencies threaten the reliability and affordability of the electricity supply consumers need.

“We are deeply concerned that PJM’s response has been typified by halting, inconsistent steps and rising internal conflicts within the stakeholder community,” it reads, noting the “abrupt termination” of two board members and the imminent departure of PJM CEO Manu Asthana.

Asthana, who has led the organization for five years, announced in April that he would resign to return with his family to their home in Texas. Two board members were not reelected at the body’s meeting in May.

The governors’ letter called on the PJM managers to take action to restore confidence in the organization by appointing “distinguished, widely respected individuals” to the open board seats. The letter requested a meeting with the board’s nominating committee to discuss a proposed slate of candidates.

The letter said representatives of the governors, who include Illinois Gov. J.B. Pritzker, Kentucky Gov. Andy Beshear, New Jersey Gov. Phil Murphy and Virginia Gov. Glenn Youngkin, would attend the board’s meeting Wednesday and be available to discuss the proposal.

PJM Board Chair David Mills said in a response to the letter that he would reserve time during the meeting for the representatives to share the governors’ perspectives with the entire board.

A spokesperson for Shapiro declined to comment on the meeting Wednesday.

One Pennsylvania state lawmaker has also called for reforms to improve PJM’s transparency and accountability. While the board of managers is independent of the generators and electric companies that are members of PJM, the member companies vote privately in committees on which policies the board will consider.

Rep. Chris Rabb (D-Philadelphia) has proposed legislation that would require members to report their votes to the Pennsylvania Public Utilities Commission. The bill is awaiting action in the House Energy Committee.

“Upper-level votes are sometimes public, but with lower-level votes being held in secret, the damage is often done before a policy is elevated to the upper-level,” Rabb said in a memo seeking co-sponsors. “Simply put, these companies shouldn’t be allowed to vote in secret when our health and the future of our world depends on it.”

PJM, based in King of Prussia, operates the electrical grid that connects power stations to local electric companies from Illinois to New Jersey and from Pennsylvania to North Carolina. It’s responsible for ensuring that there’s enough electricity available when demand peaks on the hottest and coldest days of the year.

As a result of PJM’s annual wholesale capacity auction, announced Tuesday evening, electricity producers will receive $329.17 per megawatt-day to provide capacity when the peak demand hits in 2026 and 2027. That’s the maximum rate approved by federal regulators. A megawatt-day is roughly enough electricity to power up to 900 homes for a day.

That’s a 22% increase over the price set in last summer’s auction, which drove double digit increases in consumer electricity costs that started last month. PJM noted the wholesale price of electricity accounts for a relatively small share of consumers’ electricity bills and this year’s price would likely result in a 1.5% to 5% increase.

The Shapiro administration sued PJM after last year’s capacity auction and reached a settlement in January, later approved by the Federal Energy Regulatory Commission, in which PJM agreed to reduce the maximum bid that generators could offer.

In a statement Tuesday, the administration cast the results of the auction as a $8.3 billion decrease in costs for electricity customers across the PJM region. In Pennsylvania, 13 million electricity consumers will save an average of $116 in the next year, the governor’s office said.

State Public Utilities Commission Chairman Stephen DeFrank said the hike in the wholesale cost would have been closer to 36% without the settlement.

“Between the last two capacity auctions, ratepayers in Pennsylvania and across PJM are paying billions of dollars with minimal new generation on the horizon,” DeFrank said, adding, “The only real, long-term solution to tight market conditions is the addition of new supply from all types of generating resources.”