21-05-2025
How Pennsylvania is responding to increasing electricity bills
Americans' electricity bills tend to tick up each year in line with inflation.
Subscribe to the Daily newsletter.
Fast Company's trending stories delivered to you every day
Privacy Policy
| Fast Company Newsletters
But Pennsylvania faces distinct challenges related to its electric grid – the maze of wires and generators – that drive both the growing demand for electricity and the limited supply. PJM and the electric grid
Pennsylvania power plants produce a lot of electricity. In fact, the Keystone State is the the largest exporter of electricity in the U.S. and has been for many years.
But the electricity Pennsylvania produces doesn't always stay in state.
That's because Pennsylvania's electric grid is managed by a company called PJM. PJM coordinates the flow of electricity through all or parts of 13 states and the District of Columbia, and it ensures the wholesale electricity transmission system operates reliably and safely.
Pennsylvania electric utilities, such as PECO or Duquesne Light, then distribute this wholesale electricity to retail customers, including homeowners and renters.
PJM requires the utilities to ensure ahead of time that they can meet their customers' future electricity demands, including during heat waves and winter storms. This requirement is met using a market called a 'capacity auction,' in which electricity suppliers bid to provide physical infrastructure that will generate electricity in the future.
The prices at the 2025-2026 PJM capacity auction were more than 800% higher than the previous year, in part due to the growing demand for electricity within PJM. This amounts to tens of billions of dollars in extra costs.
Power plants in Pennsylvania can't simply stop exporting electricity and supply more in-state power because they dispatch their power into the regional grid operated by PJM, and the flow of electricity is dictated by the physical structure of this grid. Soaring demand from data centers
U.S. electricity demand rose 3% in 2024 and is expected to rise even more rapidly in the coming years.
advertisement
Bottlenecks in supply
The increase in electricity demand within PJM is happening at the same time that supply is shrinking.
Many old generating plants in the PJM grid are retiring as they near the end of their useful lives and become less profitable for plant operators, particularly as natural gas and solar become more affordable. Some of these older power plants also emit a lot of pollution and are costly to retrofit to meet current pollution limits.
Beyond the challenge of plant retirements, PJM has been slow to allow hundreds of new proposed power plants – most of them solar- and battery-based – to connect to transmission lines.
This long 'interconnection queue' prevents new, needed generation from coming online. This is happening even though companies are eager and ready to build more generation and battery storage. Aging infrastructure and growing weather extremes
One of the primary recent drivers of high consumer electric bills is that the utilities have been slow to upgrade their aging wires.
Many have recently made major investments in new infrastructure and in some cases are burying or strengthening wires to protect them from increasingly extreme weather.
Electricity customers are footing the bill for this work. Response from policymakers
In response to rising electricity prices, Pennsylvania Gov. Josh Shapiro filed a legal complaint with the Federal Energy Regulatory Commission against PJM in December 2024. This complaint blamed PJM's capacity auction design for creating unnecessary costs for consumers.
According to the settlement reached after the complaint, PJM's price caps will be 35% lower at the next major capacity auction. This reduction in wholesale prices could limit retail price increases.
But this is at best a temporary fix. It doesn't address the increasing demand, aging power infrastructure battered by extreme weather, or transmission bottleneck.
In order for Pennsylvania residents to see lower electric bills anytime soon, more changes are needed. For example, many experts previously observed that PJM needs to fix the queue and get online the many power plants that are ready to build and just waiting for a transmission interconnection.
While PJM has reformed its queue process, the queue is still long. New power plants are not going up fast enough, in part due to additional challenges such as local opposition and supply chain and financing issues.
This article is republished from The Conversation under a Creative Commons license. Read the original article.
