Governors Unite to Reform PJM Energy Market, Aiming for Lower Costs and Reliable Grid

Governor Wes Moore has joined a coalition of state leaders in a significant push for reforms within the PJM Interconnection market, the wholesale electricity provider for Maryland and other mid-Atlantic states. The initiative, formalized through a jointly signed Statement of Principles at the White House, seeks to address rising energy costs and bolster the reliability of the power grid. This coordinated effort aims to encourage the development of new power generation, protect residential electricity consumers from escalating bills, and ensure that the growing demand from data centers is appropriately accounted for in the cost of necessary grid investments.

The Statement of Principles, endorsed by fellow PJM governors, outlines a strategic approach to stabilize the energy market. One of the core objectives is to shield consumers from the immediate impact of increased costs associated with incentivizing new power generation. Recognizing that these costs are currently contributing to “unacceptable increases in customers’ bills” while new generation projects face delays, the coalition is advocating for a freeze on these costs until the end of the decade. This measure would provide a period for new reforms to be implemented and shield residents from further price hikes during this transition.

A central tenet of the proposed reforms is the reallocation of costs associated with new energy infrastructure. The plan specifically targets data centers, which are significant drivers of increased electricity demand, to bear the financial responsibility for the new generation investments required to meet their consumption. The statement urges PJM to establish specialized utility rates that allocate these costs directly to data centers. This approach aims to exempt individual residents and businesses from these higher rates. However, data centers that either generate their own power or agree to reduce their energy consumption during periods of high grid stress would be exempt from these new charges.

To accelerate the development of essential power generation capacity, the proposal calls for a “Reliability Backstop Auction” to be conducted no later than September 2026. Unlike conventional auctions, this mechanism is designed to offer 15-year price certainty for developers, providing a stable environment that is expected to drive the rapid construction of new, reliable power generation facilities. In addition to these measures, the coalition is pushing PJM to expedite the study of pending energy projects, particularly those in the Transition Cycle #2, in an effort to clear the existing backlog of generators awaiting grid connection. The stated goal is to reduce interconnection timelines to 150 days or less, offering greater certainty to developers and hastening the deployment of new energy resources.

This latest agreement builds upon Governor Moore’s ongoing efforts to advocate for fair energy pricing and grid reliability. Earlier in his administration, as part of the Northeast States Collaborative, the Moore-Miller Administration initiated a request for information seeking project recommendations to enhance grid reliability and reduce electricity costs for Marylanders. This initiative specifically explored opportunities for interregional transmission to support economic growth while easing the financial burden on residents. Maryland’s participation in the Northeast States Collaborative on Interregional Transmission, a partnership with eight other states formed to identify policy steps for lowering consumer costs through improved transmission planning, underscores this commitment. Furthermore, Governor Moore has previously communicated with the PJM Board of Managers, urging adjustments to capacity market rules and a reduction in the price cap in anticipation of the 2026/2027 auction. This advocacy, in collaboration with governors from Pennsylvania, Illinois, Delaware, and New Jersey, aimed to prevent “unjust” price levels.

Article by Mel Anara, based upon information from the Office of Governor Wes Moore

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