Yesterday’s PJM Auction Results Will Raise Utility Rates Again
Sacramento, CA – As nine governors collectively signed a letter criticizing rising utility rates and mismanagement at an Eastern regional energy grid, Governor Gavin Newsom has expressed support for legislation, SB 540 (Becker), which would fold California into another regional grid and seal a similar bad fate, said Consumer Watchdog today.
Newsom in a statement last week called a regional grid a “proven model” and “our best shot at lowering energy costs.”
Nonetheless, during yesterday’s capacity auction to secure energy in the Eastern region, the regional operator PJM raised power prices by 22 percent.
“Governor Newsom needs to look East to the experience of a bipartisan group of governors who are all crying bloody murder after rate hikes and reliability failures with the same regional grid Newsom wants for California,” said Consumer Watchdog President Jamie Court. “The model has been a failure and dramatically increased energy costs. In addition to opening California environmental laws to preemption by the Trump Administration, regional organizations do not lower electricity costs.”
On July 16, the governors of Delaware, Illinois, Kentucky, Maryland, Michigan, New Jersey, Pennsylvania, Tennessee, and Virginia wrote a letter to the PJM Board of Managers expressing concerns about the affordability and reliability of PJM Interconnection LLC, which runs the energy market and grid for 13 states.
“In the past, other regions looked to join PJM due to its many strengths; today, across the region, discussions of leaving PJM are becoming increasingly common,” said the letter. “At a time of rapidly rising load growth, PJM’s multi-year inability to efficiently connect new resources to its grid and to engage in effective long-term transmission planning has deprived our states of thousands of jobs and billions of dollars in investment that may flow to other regions. Now these deficiencies threaten the bedrock reliability and affordability our consumers expect and deserve.”
The letter comes ahead of today’s 2:15 PM EST meeting of the PJM Members Committee in which the governors’ concern will be heard.
PJM’s increase is on top of last year’s increase, which stirred discontent when industry prices rose 800 percent from the prior year due to rising demand for electricity and a lack of new energy supplies. In June, New Jersey electric bills rose by about $25.
Concerns of rising costs related to PJM were reported in early June by the New York Times, which said, “The cost of electricity for residents of Delaware, Maryland, New Jersey, Pennsylvania and Virginia has increased from 23 to 40 percent over the last five years.”
But last week, Newsom expressed support for a bill that would have California be part of a similar regional grid, known as the Pathways Initiative. Under SB 540, California would not have authority to set prices or protect California’s clean environmental policy as a result of FERC control, said the nonprofit.
“California must further enable continued cooperation with Western partners to secure our clean, reliable and affordable energy future,” said Newsom. “This is our best shot at lowering energy costs, now the legislature must take action this year and deliver for the people of California.”
Data centers are also part of driving energy costs. In five years—by 2030—the U.S. will see peak hour energy supply demand rise by at least 100 gigawatts, half of which can be directly attributed to data centers.
Read Consumer Watchdog’s report, “Dirty Deal,” on the perils of SB 540 and a regional grid.
