Will Leaving PJM Affect Your Energy Bill?

The “P” in PJM Interconnection stands for Pennsylvania. That could change, but should it? Lawmakers—especially Gov. Josh Shapiro—are flirting with the idea of leaving PJM, but their policies are more consequential than Pennsylvania’s membership in PJM.

PJM is the regional transmission organization (RTO) that manages the grid for Pennsylvania, 12 other states, and the District of Columbia. More than 65 million people live within PJM’s region.

However, recent events—including a haphazard lawsuit by Shapiro—have signaled a strained relationship between the commonwealth and the RTO. Increased demand and diminishing supply amidst rising electricity costs have set the stage for a looming energy shortfall and economic hardships, making this issue more urgent every day.

Taking the ‘P’ Out of PJM

Gov. Josh Shapiro recently floated the idea of the commonwealth cutting ties with PJM. “[W]e are exploring all options here in Pennsylvania, including removing ourselves from PJM, going it alone, and determining if that is a better course for both consumer pricing and power generation in our commonwealth,” said Shapiro.

His comments coincide with some Pennsylvania public utilities exploring RTO reform. “PJM is working on market reforms,” writes Christine Martin, president of PPL Electric Utilities, “and while these are steps in the right direction, they are unlikely to address the immediate crisis facing Pennsylvania and our region.”

At the Commonwealth Foundation, we also recommend reexamining our relationship with PJM. That would mean either reforming the current RTO system or, if prudent, removing Pennsylvania from PJM.

Regardless of the path taken, reform is undoubtedly warranted.

Energy Markets are a Mess

Electricity markets nationwide are flooded with government subsidies for unreliable energy (i.e., wind and solar), distorting prices and baseload-generation planning.

RTOs, like PJM, have acted like subsidy farms, harvesting federal dollars for various pet projects. Unless federal lawmakers get their acts together, the Inflation Reduction Act will potentially invest $1.2 trillion in green-energy subsidies by 2031.

But it’s not all on PJM. Heavy-handed regulations at both the federal and state levels have run amok on energy production. Net-zero and “all-of-the-above” policies have forced the early retirement of reliable power plants (mostly without viable replacements) and created regulatory bottlenecks that have slowed the permitting process for new energy development.

These combined forces raise energy costs and jeopardize grid reliability.

Before Pennsylvania leaves PJM, state lawmakers must get their affairs in order first.

First Things First, Mr. Governor

If Shapiro is serious about leaving PJM, he must do the following:

• Drop the lawsuit defending the Regional Greenhouse Gas Initiative (RGGI). The governor’s legal appeal to keep the unconstitutional RGGI carbon tax will only increase energy prices and force reliable power plants to close.
• Abandon Green New Dealism. In addition to RGGI, Shapiro has proposed several other imprudent climate initiatives, such as the Pennsylvania Climate Emissions Reduction Act (PACER) and the Pennsylvania Reliable Energy Sustainability Standard (PRESS). PACER is ostensibly a rebranded “Pennsylvania-only” version of RGGI. Meanwhile, PRESS will double the state’s use of unreliable, part-time energy sources and cut grid reliability in half.
• Seriously reform permitting. Too often, energy producers must face regulatory double jeopardy, navigating untransparent hurdles at the state and federal levels. Sometimes, even local municipalities can complicate the process.
• Update current law. State law must codify realistic standards for power producers. First and foremost, lawmakers must prioritize grid reliability and least-cost generation planning. That way, market forces will spur the most economical and dependable energy sources to power the grid.

The pathway to American energy abundance begins and ends in Pennsylvania. If leaving PJM is on the table, Shapiro and other state lawmakers must ensure that the commonwealth is fully prepared to regain control of our grid. This can only start with sound state-level energy policies emphasizing reliable, affordable energy and transparent regulatory processes to protect ratepayers.