PA State Senator Urges PJM to Address Energy Affordability in A Rational Way That Protects Both Consumers and the Economy

Pennsylvania Senator Gene Yaw has set forth some of the soundest thinking I’ve seen on the subject of energy affordability. Here’s what he had to say recently on the subject in a news release from his office:

In a letter (see below) sent to PJM Interconnection leadership, Sen. Gene Yaw (R-23), chair of the Senate Environmental Resources and Energy Committee, urged major reforms to the regional capacity market to ensure states pursuing aggressive climate policies bear the costs of those decisions rather than shifting them onto Pennsylvania consumers.

David E. Mills President and CEO

PJM Interconnection, L.L.C.
2252 Monroe Blvd., Suite 160, Audubon, PA 19403

Re: Comments on PJM White Paper - “Powering Reliability Through Market Design” (May 6, 2026)- Urging Geographic Accountability, Constraint Surcharges, and State• Level Differentiation to Reward Responsible States and Protect Pennsylvania Ratepayers

Dear Mr. Mills:

I commend PJM for the candid and timely Report released on May 6, 2026. Your diagnosis of structural scarcity, driven by explosive data•center load growth, accelerated retirements of dispatchable generation, and doubled construction timelines with sharply higher capital costs is both honest and overdue. The paper correctly identifies the “reliability externality,” the erosion of the “shared reliability compact,” and the “credibility trap.” As chairman of the Senate Environmental Resources and Energy Committee, I stand ready to engage constructively in the stakeholder process you have initiated.

I note with great interest FERC Chairman Laura Swett’s remarks at PJM’s Annual Meeting on May 12, 2026. Chairman Swett observed that PJM’s enormous and diverse footprint across 13 states and the District of Columbia may mean it has “grown too big to function.”

She also criticized the current stakeholder process as slow, opaque, and vulnerable to vetoes, creating what she described as a “legitimacy crisis” and announced a Commission-led technical conference on July 23, 2026 to develop concrete proposals for governance and stakeholder reforms. These observations underscore the urgency of market design reforms and highlight how one-size-fits-all policies across ideologically divergent states contribute to the very gridlock and accountability challenges FERC leadership has now placed front and center.

As a state that has responsibly maintained its dispatchable generation fleet and natural gas infrastructure, in spite of efforts to the contrary, Pennsylvania finds itself in an untenable position. Virtue•signaling states with aggressive climate policies, most notably Virginia and Maryland, have pursued high renewable portfolio standards and RGGI carbon taxes that punish and prematurely retire dispatchable generation while actively courting billions in capital expenditure for hyperscale data centers and economy-wide electrification. These states are neither pulling their own weight nor paying their fair share within PJM.

This imbalance is especially acute under Governor Shapiro’s push for a flat, PJM-wide price collar extension. Although FERC approved PJM’s proposed extension of the price collar on April 28, 2026 (through the 2029/2030 delivery year), I continue to believe, as stated in my March 3, 2026 letter to FERC, that a flat, region-wide approach is counterproductive. As even Commissioner Rosner noted in his concurrence, extending the collar without accompanying near-term and long-term changes to PJM’s market rules will only make the situation more challenging.

I therefore renew my call for a hybrid approach: a base price collar for non-constrained areas combined with locational constraint surcharges in policy-driven shortage zones. Governor Shapiro’s uniform caps eliminated those very surcharges (which would have required BGE and Dominion customers to bear a far larger share of the costs of their states’ policy choices and explosive load growth), thus socializing the costs of irresponsible policies across the entire RTO. The result is that Pennsylvania ratepayers are forced to subsidize the policy choices made by Virginia and Maryland.

The problem has only worsened with Virginia’s recent re-entry into RGGI. In recent days, carbon allowance prices have skyrocketed into the mid- to high-$50s per ton. In the current environment of rapidly increasing load and flat or decreasing in-state generation, fossil-fuel plants in RGGI states are far more likely to clear PJM’s capacity and energy auctions more frequently than they would have in a surplus era.

Because PJM operates under a single, uniform clearing price, these higher-cost (RGGI-taxed) units set the marginal price paid by the entire region. The Pennsylvania Senate Republicans wisely led the successful effort to reject RGGI, but under the current system our ratepayers are directly subsidizing the carbon taxes imposed by neighboring states, even as our own dispatchable resources help keep the lights on for the whole grid.

PJM now has a historic opportunity to correct this. Chairman Swett’s identification of governance shortcomings rooted in PJM’s scale and policy diversity, together with her call for decisive action and new generation “NOW,” creates a critical window for self-correction. I urge you to develop and file with FERC market design reforms grounded in the three paths outlined in your White Paper, particularly Path B: Differential Reliability.

Geographic or zonal differentiation of reliability standards, enhanced cost-causation principles, locational capacity adders, and restored constraint surcharges would hold virtue-signaling states accountable while rewarding responsible states like Pennsylvania, Ohio, and West Virginia that continue to prioritize reliable, affordable baseload power.

Such reforms would also directly address the stakeholder process and legitimacy challenges Chairman Swett identified by reducing the friction inherent in imposing uniform rules across states with fundamentally different resource portfolios, regulatory structures, and policy priorities - thereby helping PJM demonstrate that it can function effectively and deliver fair outcomes for all members.

A copy of this letter is being sent to Pennsylvania Attorney General Dave Sunday. A copy is also being provided to FERC Chairman Laura Swett. By copy of this letter, I urge the Attorney General to explore whether the Office of Attorney General (OAG) directly or the independent Office of Consumer Advocate may legally engage more aggressively with PJM and FERC proceedings with respect to holding PJM states accountable for policies that impact the broader grid. The OAG and/or OCA could play a critical role in ensuring Pennsylvania is both protected and properly rewarded for its contributions, and we stand by to expand their statutory jurisdiction in the event General Sunday determines necessary.

Pennsylvania’s families, manufacturers, and energy producers deserve a capacity market that reflects economic reality rather than subsidizing the policy preferences of neighboring states. I respectfully request that PJM leadership prioritize these accountability measures in the upcoming stakeholder deliberations and in preparation for the July technical conference and commit to a comprehensive FERC filing as soon as possible.

My office stands ready to support PJM in this effort. I look forward to your response.

“As a state that has responsibly maintained dispatchable generation and natural gas infrastructure, Pennsylvania should not be forced to subsidize the policy decisions of neighboring states that are actively undermining grid reliability,” Yaw said. “Families, manufacturers and employers deserve a market structure that rewards responsible energy policy rather than penalizing it.”

Yaw commended PJM’s recent white paper, “Powering Reliability Through Market Design,” for acknowledging growing reliability risks facing the electric grid. He said the report highlighted challenges caused by surging data-center demand, the retirement of dispatchable power generation and rising construction costs.

In his letter, Yaw specifically criticized policies in states such as Virginia and Maryland. He argued their aggressive renewable energy mandates, participation in the Regional Greenhouse Gas Initiative (RGGI) and rapid expansion of energy-intensive data centers have increased pressure on the electric grid while shifting higher costs across the entire PJM region.

Yaw also renewed his opposition to a flat, PJM-wide price cap extension supported by Gov. Josh Shapiro, arguing it unfairly spreads costs evenly across member states regardless of which states are creating the greatest strain on the system. Instead, he called for a hybrid approach that would maintain a base price cap while adding targeted surcharges in areas facing shortages caused by state policy decisions and rapid electricity demand growth.

A hybrid proposal, Yaw said, would place greater responsibility on states driving energy shortages and reliability concerns. It would also better recognize states like Pennsylvania, West Virginia and Ohio that continue supporting reliable power generation and helping maintain grid stability across the region.

Yaw also encouraged Attorney General Dave Sunday and Pennsylvania’s Office of Consumer Advocate to take a more active role in PJM and Federal Energy Regulatory Commission proceedings. He said greater involvement would help ensure Pennsylvanians are protected from rising costs tied to the energy policies of neighboring states.

For more state-related news and information, constituents can visit Yaw’s website at www.SenatorGeneYaw.com or follow him on Facebook and X @SenatorGeneYaw.

#GeneYaw #PJM #Electricity #Affordability

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