Josh Shapiro Strategy: Demagogue PJM and Force Utilities to Raise Electricity Prices via the Back Door
Guest Post by Gordon Tomb of the CO2 Coalition.
Gov. Josh Shapiro’s proposal to cap electricity prices could, perversely, lead to higher customer bills and a greater risk of blackouts, according to America’s Power, a trade organization of coal-fired power plants.
Following negotiations with the governor, power grid operator PJM Interconnection submitted a plan to the Federal Energy Regulatory Commission (FERC) to restrict prices for two years—a period that would extend, coincidentally or not, beyond Shapiro’s 2026 reelection campaign. On April 22, FERC approved the settlement.
As usual, the governor ran a premature victory lap. Shapiro called a $14.7 billion boost in electricity costs last year the “largest unjust wealth transfer in the history of U.S. energy markets.” The price cap would provide nearly $22 billion in savings, the governor claimed.
However, the higher prices at last year’s PJM auction resulted from the rising demand for electricity and a shortage of producers willing to offer new supplies. The auctions are intended to replicate a market where prices rise and fall with the differential between supply and demand.
In a protest filed with FERC, America’s Power stated the PJM “proposal to appease Gov. Shapiro may superficially sound attractive as a way to help consumers during tumultuous economic times, but that is merely its aura, not its reality.” The trade group raises the specter of “catastrophic consequences” from PJM’s “game of reliability Russian roulette.”
America’s Power may sound hyperbolic. But in the context of more than 200 deaths in Texas from blackouts due to a lack of reliable generation and fuel, lawmakers must take the trade group’s cautionary words seriously.
Other organizations have issued the same warning.
“The governor’s proposal is dangerous because it numbs the market to price signals, which is how investment in new generation capacity is directed,” said David Taylor, CEO of the Pennsylvania Manufacturers’ Association. “In doing so, he would damage an already compromised electricity market, further undermine grid reliability, and potentially get people killed when the power goes out.”
Overseeing the electricity transmission across 13 states, PJM has issued multiple warnings of power shortages in the region within the next few years. Those warnings result partly from the forced closure of coal-fired plants by regulations and wind and solar subsidies augmenting the market. Instead of attracting new energy sources, the price cap would accelerate the shutdowns of highly reliable coal-fired plants that can keep months of fuel supplies on-site for emergencies, according to America’s Power.
Because their operations are weather-dependent, wind turbines and solar panels cannot match the reliability of units fueled by coal, natural gas, or nuclear energy. As more reliable facilities retire, most new proposals to PJM call for new generation from wind and solar operators.
PJM, said America’s Power, has sacrificed its role as a market manager in yielding to Gov. Shapiro’s complaint: “PJM, disappointingly bowing under the weight of state-imposed political pressure rather than standing up to protect market integrity and reliability, submitted a proposal that may lead to catastrophic consequences.”
Let’s be clear: The negotiated price cap does not save money; it only limits cost increases.
“Rates will continue to rise even under this agreement,” said state Sen. Joe Pittman.
In other words, Shapiro’s intervention will likely prolong the period of rising prices. If the governor continues his war on reliability with carbon taxes and enhanced subsidies for unreliable energy sources, the gap between demand and supply will increase prices even further.
The lack of new reliable generation could force PJM to use expensive “reliability must-run” agreements. These agreements enable plants shutting down for economic reasons to continue to run by compensating them at relatively high prices, according to America’s Power.
In short, bad state policies limit electricity supply and drive up your utility bills. The PJM settlement will exacerbate this problem.
Power shortages are of particular concern in winter or summer when extreme temperatures pose significant risks to people. In addition, price spikes are more likely during cold spells when home-heating demands compete with power plants for natural gas. During a January polar vortex, coal plants potentially avoided as much as $1.4 billion in increased costs and provided more than 40 percent of the additional energy needed to warm homes and businesses, America’s Power claimed.
The FERC-approved Shapiro–PJM settlement boils down to one question: What good are lower prices if there is no electricity when it’s most needed?
This commentary was first published at DV Journal on April 28, 2025.
#PJM #Shapiro #ElectricPrices #Demagoguery
Gordon Tomb is a Senior Fellow with the Commonwealth Foundation, Pennsylvania’s free-market think tank, and a Senior Advisor with the CO2 Coalition in Arlington, VA.
#Grid #ElectricGrid #Pennsylvania #Energy #EnergySecurity #EnergyReliability #Shapiro #JoshShapiro #ElectricPrices #CarbonTax
Politicians are us. Electricity is merely magic on the other end of the light switch. They, like the rest of us, will flip the light switch a hundred times during a period of lost electricity. It’s the switch that brings us the magic. Nothing more. Who cares what is done at the other end in the black box?
These leftist politicians are just not acting in favor of their constituents. Continually they make policy and decisions that favor political backers and lobbyists. They like the money in their back pockets.