Sen. Gene Yaw (R-23)
Pennsylvanians are frustrated by rising electricity bills, and rightfully so. In a letter sent just this week, Gov. Josh Shapiro pointed to PJM, the regional transmission organization that manages our power grid, as the cause of these increases. In reality, energy costs more because we’re not producing enough of it. Before we point any fingers, it’s important to understand what PJM is, what it does and, most importantly, what it does not do.
PJM is one of nine regional transmission operators (RTOs) in the United States and the largest in the nation. It coordinates electricity for 13 states and the District of Columbia, serving roughly 67 million people. Headquartered in Valley Forge, PJM has focused on one mission for nearly 100 years: keeping the lights on by ensuring electricity is delivered where it’s needed, when it’s needed, in the proper amount.
PJM does not own power plants or transmission lines. Much like an air traffic controller doesn’t own airplanes or airports, PJM doesn’t own the infrastructure. It simply directs electricity across the grid. Blaming PJM for high electric rates is like blaming an air traffic controller for the price of an airline ticket.
Historically, PJM’s system worked well. Its capacity auctions, where power generators bid to supply electricity three years into the future, provided clear market signals that guided investment and maintained reliability. This model thrived when roughly 95% of our electric supply came from thermal, dispatchable generation such as coal, natural gas and nuclear. These sources operate 24/7, regardless of time of day or weather conditions.
Over the past decade, however, several states within the PJM footprint adopted aggressive renewable energy mandates, heavily favoring intermittent sources like wind and solar. These resources, while part of the future energy mix, cannot produce electricity around the clock and are entirely dependent on weather and daylight. As these policies expanded, hundreds of megawatts of coal-fired thermal generation were shut down without being replaced by an equivalent amount of new, reliable capacity.
The result has been predictable: reduced supply, increased demand and higher prices. This is Economics 101. When policymakers force rapid retirements of dependable generation and replace them with intermittent resources, costs rise. And they will continue to rise until we rebuild adequate generation supply.
Despite its century of reliable operation, PJM is now being criticized for struggling to fit intermittent energy into a system designed for constant, stable electricity delivery. Some have even suggested Pennsylvania should leave PJM altogether. That idea is extraordinarily expensive. Early estimates indicate withdrawing from PJM would cost ratepayers more than $2 billion.
Even then, how would Pennsylvania attract new power generation? By subsidizing companies to build here? By creating our own auctions? The market realities won’t change simply because we step outside the PJM system. Leaving PJM could very well result in Pennsylvania being the odd man out.
If Pennsylvania is serious about stabilizing electric rates, the solution is not to restructure PJM or walk away from it. The solution is to increase supply. Without building reliable baseload generation, no amount of regulatory reshuffling will bring prices down.
PJM’s job is to manage the flow of electricity, not to generate it, regulate it or dictate state policy choices. The real drivers of higher electric bills are the decisions that have reduced dependable generation without ensuring adequate replacements.
If we want affordable, reliable electricity, we must focus on increasing supply, not searching for scapegoats. Only then can we protect ratepayers and maintain the dependable energy system Pennsylvanians expect and deserve. We need to stop pontificating and start building new dispatchable generation, yesterday.
Sen. Gene Yaw represents the 23rd Senatorial District, consisting of Bradford, Lycoming, Sullivan, Tioga and Union counties. He serves as chairman of the Senate Environmental Resources and Energy Committee.
CONTACT:
Elizabeth Weitzel
717-787-3280