Grid operator PJM faces new complaint over power supply auction

By Laila Kearney

NEW YORK (Reuters) -A consumer advocacy group has launched a complaint against PJM Interconnection, saying the largest U.S. grid operator is unfairly awarding record high payments to power plants and pushing up electricity costs for homes and businesses.

The filing with the Federal Energy Regulatory Commission on Monday is the second recent complaint over PJM Interconnection's 2025-2026 capacity market auction, which set prices for power generators that were more than 800% higher than the previous year.

Following the results, PJM leaders said the all-time high prices were largely caused by ballooning power demand and shrinking supply as fossil-fired power generators retire.

"These clearing price outcomes do not match the market facts on the ground," the joint consumer advocacy group said in its complaint. "PJM's existing capacity market rules are unjust and unreasonable."

The consumer advocacy group, which includes the Illinois Attorney General's Office, Maryland Office of People's Counsel, New Jersey Division of Rate Counsel and Office of the Ohio Consumers' Counsel, said the rules governing PJM's capacity auction should be changed.

A PJM spokesperson said the organization was reviewing the complaint and did not provide comment.

PJM Interconnection pays power plants to operate at times of high demand, with prices for the payments set at annual auctions using an evolving set of rules to determine those prices.

The latest auction increased capacity costs to consumers to $14.7 billion from $2.2 billion, the complaint said. Under current PJM capacity market rules, some estimates project the 2026/2027 auction could result in charges to ratepayers surging to $37 billion, the complaint says.

PJM delayed that auction, which was scheduled for December, by six months to address a separate complaint against it filed by environmental groups, including the Sierra Club.

"There is a lot of back and forth by various parties in terms of trying to get the rules to reflect what they want the outcome to be," said Paul Patterson, an analyst at Glenrock Associates LLC in New York.

The PJM market watchdog and the governors of Pennsylvania, Illinois, Maryland, New Jersey and Delaware are among those to criticize the grid operator's market rules and call for changes.

Among the suggested changes is factoring in currently excluded power plants with special contracts, known as RMR agreements, to be included in the auction.

Source: Investing.com