PJM’s mismanagement of the grid has worsened reliability, raised energy prices, and increased pollution, enriching the for-profit companies who comprise the majority of its voting members
WASHINGTON, D.C. – Lawmakers and advocates from several states gathered today outside the Federal Energy Regulatory Commission (FERC) to call for needed reforms in the governance of PJM Interconnection (PJM), the organization that manages the power grid for 13 states and Washington, D.C.
Inside, FERC was meeting to consider PJM’s governance and stakeholder processes, with a particular focus on identifying and evaluating concrete, actionable reforms to improve PJM’s ability to address “operational and market needs in a timely and efficient manner,” according to the FERC website.
Advocates and lawmakers argue that PJM’s current governance structure gives disproportionate voting power to market participants with financial interests in the outcomes of its decisions. As it stands, PJM’s conflicts of interest and self-dealing have caused it to mismanage the grid, leading directly to surging energy prices.
In addition, PJM’s policies are delaying lower-cost clean energy projects while keeping more expensive power sources on the system – contributing to higher electricity bills across the region. A recent analysis found that if PJM were to allow more clean energy to connect to the grid, it would save each of its customers $500 a year through lower energy bills. Meanwhile, PJM is forcing ratepayers to pay coal plants just south of Baltimore hundreds of millions of dollars to stay open, when cleaner alternatives would be less expensive.
“PJM’s decisions affect every household and business across our region. However, the elected officials accountable to those ratepayers – the families and businesses who ultimately pay the bills – do not have a meaningful voice in the process,” said Maryland Senator Katie Fry Hester (Howard and Montgomery counties). “The PJM Legislators’ Collaborative, made up of legislators across the PJM states, is calling for a new governance framework that (1) clearly defines PJM’s public-interest mission, (2) gives states a meaningful institutional role, (3) strengthens Board independence and accountability, (4) modernizes decision-making, and (5) improves transparency and oversight. This will lead to better decisions, greater accountability, and ultimately more affordable rates for the millions of people we represent.”
“Back in Jersey, people are having to choose between groceries or their energy bill – this is what happens when monopolies at the top put profits over people without any effective oversight,” said United States Senator Andy Kim (New Jersey). “We need transparency, accountability, and real solutions from PJM about how they plan to bring costs down for millions of people and stop price gouging those who simply should not have to live like this.”
“The latest capacity auction has again highlighted PJM’s total failure to properly manage our electric grid and keep costs down for Pennsylvania’s families and local businesses,” said Molly Parzen, executive director, Conservation Voters of Pennsylvania. “We can no longer trust PJM to police itself. The public deserves real transparency that lifts the veil on its secretive operations. We need PJM to remove artificial obstacles that are keeping clean energy projects from coming online and lowering energy prices for families who are struggling.”
“As state lawmakers, we are responsible for ensuring an affordable, reliable, and clean grid. Yet, our policies are consistently thwarted by policies established by PJM,” said Maryland Delegate Lorig Charkoudian (Montgomery County). “PJM’s policies are developed through a stakeholder process in which the market participants have the strongest voices. This means that the generators and transmission owners, those who stand to gain the most financially from the policies, are driving the PJM policies. It’s time to shift PJM away from serving industry to serving the public interest. This means putting state policies front and center and including state policymakers in the decision-making process.”
“When the electricity sector was deregulated in the early 2000s, PJM was founded by FERC to have independent authority over the for-profit companies that would be operating as monopolies in the electric energy sector,” said Pennsylvania Representative Joe Webster (Montgomery County). “Today, PJM is subject to those industries, for lack of governance. That sector has failed to innovate. It makes record profits, and our ratepayers in Pennsylvania, in New Jersey and Maryland, and across the region are paying higher and higher electric bills. So, I really can’t say this enough times: It is time to push PJM back into its original role, to support new energy sources and innovation, and to do that to favor ratepayers, to lower electric costs for every household in the region.”
“Too often consumers and state policymakers are left on the sidelines when PJM is making critical decisions, resulting in families and small businesses paying the price for expensive coal plants while delaying lower-cost clean energy projects,” said Quentin Scott, Chesapeake Climate Action Network (CCAN) Federal Policy Director. “FERC has both the authority and the responsibility to ensure that PJM’s governance is transparent and accountable to the public interest. It’s time to reform PJM’s stakeholder process so that the people who pay the bills—and the state regulators charged with protecting the public interest—have a meaningful voice in shaping the future of our electric grid.”
“Years of PJM’s slow-moving process failures are now landing on kitchen tables across New Jersey. This conference is a chance to build a record for real change, giving states and ratepayers a genuine voice, unclogging the interconnection queue so ready projects can connect, and ending preferential treatment that keeps costs high. We’ll be watching closely for FERC to move from listening to acting,” said Anjuli Ramos-Busot, Director for the New Jersey Sierra Club.
“We are here to ask PJM to put ratepayers’ interests first,” said Rebecca Rehr, director of Climate Policy and Justice, Maryland League of Conservation Voters. “A fundamental flaw in PJM’s governance structure is that it is not designed to prioritize ratepayer or affordability needs. We’re seeing mismanagement at PJM and the resulting electricity cost spikes in part because states and ratepayer advocates lack an adequate voice at the table.”
###
