PA Environment Digest Blog: Sen. Yaw Urges FERC To Allow PJM To Keep Charging Pennsylvania Ratepayers Record High Capacity Auction Prices For Power, But Charge Other States Even More

On March 4, Sen. Gene Yaw (R-Lycoming), Majority Chair of the Senate Environmental Resources and Energy Committee, announced he called on the Federal Energy Regulatory Commission to allow the PJM Interconnection to keep charging Pennsylvania ratepayers record high capacity auction prices for power, but charge other states in PJM with fewer power generation resources even more.

In a March 3 letter to FERC, Sen. Yaw urged federal regulators to change PJM's two-year extension of the price collar on capacity auction prices negotiated by Gov. Shapiro-- $177/MW-day floor and $329/MW-day cap-- into a hybrid system.

Under Sen. Yaw's proposal, Pennsylvania and other states within PJM with significant "non-constrained" generation capacity would still be subject to the $329/MW-day charges, but other "constrained" states like Maryland and Virginia with fewer generation resources would be charged a surcharge of $237/MW-day and $211/MW-day respectively.

"This hybrid model preserves the collar’s consumer protections for unconstrained areas like Pennsylvania, Ohio and West Virginia while restoring market signals to drive investments in high-demand zones," said Sen. Yaw.

"It aligns with Federal Power Act requirements for just and reasonable rates, avoiding undue discrimination by tying charges to objective transmission and demand factors, as affirmed in FERC precedents on locational pricing," Sen. Yaw explained.

Impact Of Proposal

Sen. Yaw's proposal would give no relief to Pennsylvania ratepayers from record high PJM capacity auction prices.

In broad terms, it would also continue to pay Pennsylvania power generators record high prices for their power with little incentive to add more capacity.

Under Sen. Yaw's proposal, generators would actually be drawn to build new power plants in states paying nearly double the price they would be paid in Pennsylvania, as Sen. Yaw's own discussion of price "signals" explains.

It could also have the result of driving more A.I. data centers into Pennsylvania where, as power consumers, they could avoid the surcharges giving Pennsylvania a competitive advantage.

At the same time, they would take power away from other users in Pennsylvania, unless a "bring your own power" requirement was adopted for data centers as advocated by Gov. Shapiro and PUC Chairman Stephen DeFrank.

Auction History

The last two PJM auctions saw prices come in right at the $329/MW day cap, record high prices in their own right.

Without the cap, PJM estimated prices would have been $389/MW-day in July 2025 and $529/MW-day in December, saving ratepayers hundreds of millions of dollars in avoided costs.

But the cap is still significantly higher than PJM's previous auctions-- $28.92/MW-day in February 2023 and $269.92/MW/day in July 2024.

Capacity auction prices have been and will continue to be driven to record highs by extraordinary power demands from existing and proposed A.I. data centers in Pennsylvania and several other PJM states for the foreseeable future, according to PJM.

As a result, PJM auction prices were very likely to exceed the $329/MW-day cap; the reason Gov. Shapiro and other Governors in PJM urged the grid operator to extend the cap in the filing now before FERC.

PJM Market Not Working

As Gov. Shapiro said at the 13-state PJM Summit last September-- PJM is “not working anymore.” Read more here.

“PJM has been too slow to let new generation through its queue to join the grid at a time when demand for energy is going up,” said Gov. Shapiro. “PJM has a D-minus rating for the speed of its interconnection queue. Those delays threaten the very energy projects PJM says we need.

“This slow, reactive approach is no longer working for our states and the communities we serve."

PUC Chairman Stephen DeFrank told the Senate Appropriations Committee March 3-- “Just my personal view is I don't think the construct of the market was ever designed for these types of challenges.” [Read more here.]

“This market was designed for a 1% to 3% slow and steady load growth year in and year out. The challenge with that data centers, it's threefold.

“It's the size of the load, it's the speed of interconnection, the speed of the load, and there's not an end in sight. This is going on indefinitely forward.

“So those three things, those three aspects have made it very challenging for this capacity market to work.

“And in fact, we've seen the capacity market even before we've gotten into large loads, as we've seen increased electrification, we've seen the market [trends] go vertical.

“And what I mean by that is we want a flat market. We want a horizontal market.

“We don't want a vertical market because when we have a vertical market, small changes in load, in demand, results in huge changes in price.

“And so you want a flatter curve where you can absorb those differences in load and it not impact prices drastically as it has been in this current construct.”

Click Here for a copy of Sen. Yaw's letter.

Click Here for a copy of Sen. Yaw's announcement.

Sen. Gene Yaw (R-Lycoming) serves as Majority Chair of the Senate Environmental Resources & Energy Committee and can be contacted by calling 717-787-3280 or sending email to: gyaw@pasen.gov.

(Chart: Environ Energy.)