Study: Marylanders could save hundreds on electric bills if grid undergoes reform
Maryland ratepayers could save hundreds of dollars a year on their electric bills if the regional power grid operator could speed up approval of energy projects, some of which have languished for five years in the current system.
That is main finding of a new report on PJM Interconnection, the grid operator that distributes power in Maryland, the District of Columbia and 12 other states, stretching from the mid-Atlantic to parts of Illinois.
The report, released Tuesday by a national environmental nonprofit, predicts that Maryland households could see an average of $546 in annual savings on their electric bills from 2025 to 2040, with savings peaking at$1,006 a year in 2036 over current practices. The report, by Massachusetts-based research and consulting firm Synapse, predicts that bills across PJM will grow by 60% between now and 2036 with no change in policies; with the changes, bills would actually decrease by 7% in that period.
'Folks probably don't know much about PJM or what this organization is doing behind the scenes, but it's about to hit their pocketbooks,' said Charles Harper, senior policy lead for the power sector at Evergreen Collaborative, the environmental nonprofit that commissioned the report.
'So, we wanted to look at what PJM has done to contribute to this problem, by not adding new energy projects efficiently to the electric grid, and to really look forward and look proactively at what reforms we could do now,' he said.
It's not just PJM. Harper said grid operators around the country are feeling the pinch of a 'new paradigm.'
'Historically, maybe a few large power plants would be in the queue and would need to be studied. But now, a hundred smaller solar, wind and storage projects are in the queue instead,' Harper said.
As demand for AI rises, so do power-thirsty data centers
The slow pace of approvals is no longer suitable in a world where the demand for energy is soaring, driven by data centers that require massive amounts of power, including those in Northern Virginia, a data center hotbed. Between 2025 and 2040, energy load growth is expected to increase by 72%, and data centers will account for the majority of that increase.
'That status quo of approving projects slowly is no longer tenable, because it's starting to lead to massive cost increases,' Harper said.
But studies have shown that PJM is particularly slow. A February 2024 scorecard from GridLab handed PJM a grade of D-minus, worst of the seven grid operators studied. Tuesday's study indicated that PJM has had 64 energy projects, which together account for 5 gigawatts of production, in its queue since 2020 or earlier. PJM's board has estimated that the region could face capacity shortages as soon as the 2026-2027 delivery year.
The report comes as Maryland customers are bracing for increases as high as $18 a month in their residential electric bills this summer, depending on their utility, according to another Synapse study, this time commissioned by the Maryland Office of People's Counsel. The increases are the result of a record-breaking electricity auction last summer by PJM, that set prices for power beginning June 1, 2025.
Maryland lawmakers, spurred by complaints of already rising utility bills, approved sweeping energy reform legislation in the just-ended General Assembly session, which included redirecting an energy efficiency fund into refunds for Maryland ratepayers in fiscal 2026. Those refunds are expected to average about $80 per household.
The main goal of the legislation, which is awaiting Gov. Wes Moore's (D) signature, was to expedite state-level approvals for new power facilities, for everything from nuclear and solar to natural gas and battery storage. Even then, however, Maryland is still beholden to PJM, which must assess every utility-scale energy project before it can come onto the grid, determining whether transmission upgrades are needed to accommodate new projects, from solar arrays to wind turbines and battery storage.
Maryland Energy Secretary Paul Pinsky said during a virtual news conference Tuesday that PJM is 'one of the largest obstacles,' to achieving Maryland's clean-energy goals and lower customer bills.
'For too long, PJM has caved to the interests of fossil fuel generators and utilities that profit from high electricity prices and scarce new generation,' Pinsky said. 'That's, in my opinion, why PJM has slow-walked reforms that would lower prices.'
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Pinsky said he does not believe Maryland should leave PJM, but called on the member states to pressure the grid operator to speed up interconnection.
In a statement, PJM spokesman Jeffrey Shields said the grid operator began 'significant interconnection process reform in July 2023' that has already trimmed the backlog, with additional approvals coming soon.
'In 15 months, PJM relieved the interconnection backlog by 60% and placed more than 6 [gigawatts] of new generation into service,' Shields wrote.
Shields added that the 'significantly higher prices in PJM's last capacity auction confirmed concerns that we had been calling out over the past two years — that the supply/demand balance has been tightening.'
PJM's reforms included streamlining 'Surplus Interconnection Service,' allowing new energy projects to come online at points where the facility does not run continuously — battery storage beside a renewable energy project, for example. PJM also got approval to start a 'Reliability Resource Initiative,' fast-tracking up to 50 'shovel-ready' projects.
But critics, including Pinsky, argue that the criteria for the initiative favor natural gas, rather than renewable energy projects.
'PJM promotes their Reliability Resource Initiative, which fast-tracked projects like gas plants. Many projects in the queue are solar paired with storage. Why aren't these fast-tracked?' Pinsky asked.
Tuesday's study called on PJM to embrace additional reforms, including a requirement from the Federal Energy Regulatory Commission that grid operators complete new-project reviews in 150 days. PJM pushed back against that requirement in a filing with the FERC. The study also said PJM needs to update its understanding of battery storage from its current outsated assumption that 'energy storage will charge during peak and require associated transmission upgrades.'
The Evergreen report's best-case modeling included some items that PJM said it is already pursuing, such as a 'first-ready, first-served' process that prioritizes approval for projects that could be operational sooner, as well as a clustered approach, where projects can be considered as a group, rather than one-by-one.
The study predicts that carbon dioxide emissions would fall 14% if PJM completes the reforms, which it assumes would lead to an increase in renewable energy generation — even though it concedes that the reforms could lead to approval of new gas-fired power plants.
Lawmakers approve energy reform bills aimed at cutting rates, boosting in-state generation
'We are not hiding those results, even though we think that better options are available for people and the climate — and for ratepayers,' Harper said.
The biggest beneficiary of the reforms would be battery storage, which the report's computer model predicted would increase by 59 gigawatts compared to the status quo scenario. But new gas combined-cycle units came in second with 25 gigawatts, and onshore wind took third place with 8 gigawatts.
After a recent appeal led by Pennsylvania Gov. Josh Shapiro (D), and backed by Moore, PJM has pledged to lower the cap set for the next two annual auctions, thereby lowering rates for customers.
PJM has also made a change regarding Maryland coal plants.
Talen Energy had planned to close two Maryland coal-fired plants, Brandon Shores and H.A. Wagner, but PJM required them to keep running to meet electricity demand, under arrangement, known as a 'reliability must run' agreement. Those plants will continue operating past their June 1, 2025, closure dates, with Baltimore Gas & Electric ratepayers footing the bill.
But the energy to be provided by the two plants was not accounted for in PJM's record-breaking energy auction last summer, raising prices further. In effect, BGE customers are paying for Brandon Shores and Wagner twice: once because of the auction and again because they will pay the plants to run.
After pushback surrounding the auction, PJM said it will include RMR agreements in future auction calculatiohs. Had Brandon Shores and Wagner been included, BGE customers would see a $5.50 per month increase starting in June — rather than a $16 monthly increase, on average.
In a filing Monday, the Office of People's Counsel asked FERC to give BGE ratepayers a reprieve — or give them a refund if a ruling comes after June.
'PJM ran a flawed auction resulting in prices that—unless corrected—will cost Maryland residential electric customers hundreds of dollars per year in unreasonable and unnecessary capacity costs,' Maryland People's Counsel David S. Lapp said in a statement. 'We are asking FERC to undo those unjust results.'
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