DV Journal

Red lights are flashing at one of America’s largest electricity transmission operators over possible power outages after it was forced to spend 700 percent more to buy power for its customers in the latest auction.

“The significantly higher prices in this auction confirm our concerns that the supply-demand balance is tightening,” said PJM President and CEO Manu Asthana.

It’s quite a shock for a nation that leads the world in natural gas and wind power production and ranks second in solar electricity.

PJM Interconnection is America’s largest regional transmission organization, coordinating the movement of wholesale electricity across 13 states, including Pennsylvania, and the District of Columbia. It spent $14.7 billion during the auction to secure some 135,000 megawatts (MW) of electricity. That’s nearly seven times the amount the company paid last year to purchase less power.

PJM officials said there’s enough energy through the spring of 2026, but warned that might not be the case in the future as more coal and natural gas power plants are forced off the grid by new Biden-Harris administration emissions policies.

Those higher energy prices will likely be passed along to consumers in the form of higher bills – possibly between 10 and 20 percent.

The good news, according to Terry Fitzpatrick at the Energy Association of Pennsylvania, is customers will see bills gradually rise because utilities “ladder the contracts over time to try to mute those sudden swings [in prices].”

PJM officials argued prices would lower if there was more supply from more power plants. “The market is sending a price signal that should incentivize investment in resources,” said Asthana.

Instead, the Biden White House has issued a rule requiring existing coal-fired plants that are expected to operate over the long-term to capture 90 percent of their carbon emissions by 2032. The same mandate would also fall on all new natural gas-fired power plants.

Energy experts say there are currently no power plants that can operate under the 90 percent mandate.

PJM estimated between 24,000 to 58,000 MW of energy will be retired from the grid by 2030 without being replaced. Almost 20,000 of that will be due to state and federal regulations.

The North American Electric Reliability Council (NERC) reports that “the electrification of many sectors, such as transportation and technology, increases demand for electricity and the importance of reliability and resilience of generation energy supply.” As a result they project that demand will increase 30 percent by 2050 due to de-carbonization and electrification goals.

The question is where the supply will come from to meet that demand. Thus far, it doesn’t appear to be renewables.

Despite spending more than $420 billion in taxpayer dollars on green energy projects, the Biden-Harris administration yielded few results. Some 40 percent of those projects are delayed, according to the Financial Times.

Energy sector experts are especially concerned about green energy delays. Even if those projects finish on time, they’re not expected to contribute much to the grid.

“Wind only works from winds and sun only works from the sun shining, and those are really expensive forms of energy because the intermittency,” Trisha Curtis, chief executive of the consultant group PetroNerds told InsideSources.

In an analysis released earlier this year, PJM said wind and solar can’t be counted on to provide energy at all times because they’re weather reliant. NERC agreed and noted that low wind conditions could result in the loss of tens of gigawatts of capacity at once.

“The new resource mix can be more susceptible to long-term, widespread extreme events, such as extreme temperatures or sustained loss of wind-solar, that can impact the ability to provide sufficient energy as the fuel supply is less certain,” NERC reported.

GOP presidential nominee Donald Trump promised Tuesday he will revoke the Biden-Harris emissions policy.

“It’s a disaster for our country,” Trump said. “Instead of shutting down power plants, we will open dozens and dozens more, and they’ll happen fast.”

Green energy groups aren’t ready to take the blame. Advanced Energy United suggested PJM should take responsibility for the higher prices claiming that it failed to properly plan out energy infrastructure to build more transmission lines.

Fitzpatrick argued that people and politicians should listen to the electrical engineers at PJM and NERC, not the green activists regarding the potential power shortage.

“They’re saying it’s a real concern the rate at which we’re retiring these plants that can operate around the clock because those are the workhorses of the system.”

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Having heard witnesses say America’s largest power grid remains unreliable nearly a year after a close call with blackouts last Christmas, Pennsylvania State Sen. Gene Yaw called the testimony “a little scary.”

Glen Thomas, a former Pennsylvania Public Utility Commission chairman who consults on grid issues, testified during a joint hearing of Pennsylvania and Ohio legislators. “Reliability challenges are likely to get worse, not better,” he said.

Other witnesses were no more encouraging.

“We cannot operate a system with 100 percent renewables,” said Asim Haque, a senior vice president of the PJM Interconnection, which serves 65 million people in all or parts of 13 states and the District of Columbia.

Haque’s statement contradicts what many “green” energy proponents claim about wind and solar power—technologies that account for most new energy sources proposed for PJM because subsidies and regulations have made more reliable sources uneconomical.

Without grid reliability in Pennsylvania (the nation’s largest electricity exporter), there is none in PJM. And reliability has often taken a back seat to the politics of energy policy. That puts Pennsylvania policymakers at the heart of the matter.

Repeated—even urgent—warnings abound that the power grid is increasingly prone to failure. Some of these warnings come straight from grid overseers, including the Federal Energy Regulatory Commission and the North American Electric Reliability Corporation (NERC).

In PJM and neighboring regions, severe cold “can lead to energy emergencies as operators face sharp increases in generator forced outages and electricity demand,” according to a recent NERC assessment. “Forecasted peak demand has risen while resources have changed little in these areas since Winter Storm Elliot (December 2022) caused energy emergencies across the area.”

The bottom line is Pennsylvanians are in dire danger of life-threatening winter blackouts. Let’s not forget the 2012 cold snap in Texas that killed more than 200 people and caused billions of dollars in economic damages.

The reason is painfully clear: States and utilities are shutting down reliable power plants, especially coal-fired and nuclear facilities. They are replacing these reliable sources with unreliable sources, such as wind and solar generators, which do not work on cold, windless nights.

Since its present program clearly is not working, PJM has proposed significant changes to how it secures reliable power plants. Commendable as PJM’s effort is, it has been a long time coming.

Grid reliability wilted for years under conflicting state and federal policies that favored wind and solar at the expense of more reliable fossil fuel and nuclear plants. In addition, ever more stringent federal environmental policies have forced the closure of some of the world’s cleanest coal-fired plants, increasing dependence on other less reliable or more vulnerable sources during cold weather.

For more than a decade in Pennsylvania, subsidies for so-called alternative energy sources have worked against grid reliability. In 2019, then-Gov. Tom Wolf tried to impose a carbon tax on electricity generation by joining the Regional Greenhouse Gas Initiative (RGGI). Wolf’s proposal not only discouraged the construction of new natural gas-fired plants but also hastened the July closure of the state’s largest coal-fired plant at Homer City. Meanwhile, developers canceled plans in 2023 for two gas-fired power plants after failing to get approvals from a state regulatory regime described by some industry sources as the nation’s most hostile.

Although a court ruling killed the carbon tax, Gov. Josh Shapiro has decided to appeal RGGI’s dismissal to the state Supreme Court. Separately, he has proposed increasing alternative energy subsidies. Both actions go in exactly the wrong direction.

Instead, here are some things for Pennsylvania policymakers to consider as a course correction:

• Focus first on cold winter nights with no wind or solar power. Obvious solutions are adequately winterized gas-supply systems and coal and nuclear plants with on-site fuel supplies that protect against the vulnerabilities of just-in-time pipeline deliveries.
• Stop claiming wind and solar can replace coal, gas, and nuclear. They can’t.
• Allow construction of pipelines to supply fuel to gas plants. More than two-thirds of voters support such infrastructure development, according to a poll by the Commonwealth Foundation.
• Resist federal regulations that undermine reliability and change state policy that does likewise.

Grid reliability can be complicated, but it should not be scary.

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“At the current trajectory, PJM is not going to have sufficient power to meet the demands of consumers, and prices are likely to increase.”

That dire warning came from Glen Thomas, president of the industry group PJM Power Providers, at a state Senate Environmental Resources and Energy Committee briefing earlier this week addressing the pressing concern of electrical grid reliability in Pennsylvania.

Grid operator PJM distributes power across 13 states from Illinois to North Carolina from its headquarters in suburban Philadelphia. The company doesn’t generate electricity or operate power plants. Instead, its primary mission is to “ensure the safety, reliability, and security of the bulk electric power system,” including here in Pennsylvania.

And that mission, Thomas warned lawmakers, is in danger as reliable power sources continue to be retired from the grid—something that’s occurring “faster than anticipated.”

Thomas told DVJournal that “demand is increasing, supply is retiring, and it’s not being replaced by the quantity of assets necessary to sustain reliability.”

“It’s a pretty simple supply-and-demand issue,” he said. “Electricity markets are complicated, but the problem itself is that demand is going up, and supply is leaving and not being replaced.”

At the briefing, committee Chairman Gene Yaw (R-Bradford) blamed green-energy politics for the pace of power source retirements.

“Short-sighted environmental policies have forced fossil fuel plants into nonexistence, resulting in fewer reliable energy sources to shoulder the burden of increased demand on Pennsylvania’s electrical grid,” Yaw said.

James Locher, the chief operating officer of Key Con LLC, also spoke at the briefing, laying out how much Pennsylvania households still rely on fossil fuel-generated energy. Key Con LLC manages the large Keystone and Conemaugh coal plants in western Pennsylvania. Locher said these plants deliver “3,400 MW of reliable power” into the PJM system.

And during weather events like 2022’s Winter Storm Elliott, his plant becomes absolutely essential. As the cyclone bomb drove temperatures down and demand up, PJM called for customers to conserve electricity use as it struggled to find power sources to meet demand.

“Without adequate and comparably reliable replacement capacity accounting for the contributions of Keystone, Conemaugh, and other coal-fired units,” Locher said, “future electric power system failures in PJM are more likely during similar extreme weather events.”

PJM itself has been undertaking extensive research to determine the scope of the grid retirement crisis it is currently facing. In research published earlier this year, a company analysis predicted a whopping 21 percent of its “current installed capacity” could be out of commission within seven years, with the largest share of those closures, PJM estimated, potentially coming from government regulations.

The company estimates “40 GW of existing generation … at risk of retirement by 2030.” Breaking it down, PJM projected “6 GW of 2022 deactivations, 6 GW of announced retirements, 25 GW of potential policy-driven retirements, and 3 GW of potential economic retirements.”

Thomas said it could be difficult to determine the effects of environmental policies on costs versus outright closures of plants. “If an environmental regulation changes, and that increases the costs associated with a unit’s ability to produce power, and it’s forced to retire, is that a policy retirement, or an economic retirement?”

“Very few of these policies are mandating retirement,” he posited, “they’re just increasing costs associated with these facilities until they’re no longer economically viable.”

Demand will also rise in the near future, the PJM analysis said, ranging from 1.4 percent to localized 7 percent surges. And what the grid loses in legacy generation, the analysis said, it will not make up for in next-gen renewables.

Thomas told DVJournal that “right now, the market rules are set up in such a way that most units are receiving an economic signal to retire.”

“If we can change those economic rules so that those economic signals change, I believe there is an opportunity to turn this around,” he said. “But on the current trajectory, with the current rules in place, this region is going to be short of power” in the next few years.

PJM’s “New Services Queue” consists “primarily of renewables (94 percent) and gas (6 percent),” the analysis said. The “historical rate of completion for renewable projects has been approximately 5 percent,” PJM noted, and “the current pace of new entry would be insufficient to keep up with expected retirements and demand growth by 2030.”

Yaw pointed out that Pennsylvania’s access to electricity isn’t determined by what happens in its borders.

“What other states do has a great effect on the grid. For example, any of the [PJM] states that say they’re going to go completely green or clean or whatever you want to call it — they say they’re not going to use any more fossil fuel. Well, that means they’re going to rely on someone else to provide power for them in those times when these clean and green energy projects don’t work. They’re intermittent; they depend on the time of day. The example I use is: Where does the power come from for a solar array at 3 o’clock in the morning?”

Yaw said the effect of current and upcoming plant closures could take as much energy off the grid to equal about 40,000 acres of solar panels. “We don’t have 40,000 acres of solar panels in the works. I’m not even sure where we would put 40,000 acres of solar panels.”

“If we keep giving PJM the policy that we’re doing by switching over without a plan behind it, I don’t know what the solution is,” he said.

“There are two solutions: There will be certain times when you operate your appliances or charge your car or whatever, or there will be rolling blackouts. Neither of those sounds like they’re very good options to me.”

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Nearly a year ago, Texas’ electrical grid buckled under a historic freeze. More than 200 people died, and millions were left without power for days in subfreezing temperatures.

Industry experts in Pennsylvania said they have learned harsh lessons from the Texas tragedy as they take steps to guard against a similar catastrophe in the Keystone State.  That is good news since a colder than average winter is predicted for 2022.

And Pennsylvania already has built-in advantages over Texas, which has operated for decades on its own deregulated power grid that industry watchdogs blamed in part for last year’s crisis.

The northeast region is accustomed to frigid temperatures and stark weather shifts. So, some measures that Texas grid operators and utility companies took after last year’s cold snap, such as wrapping electric cables with rubber insulation and enclosing infrastructure, are already standard techniques here, said Paul McGlynn, executive director of system operations at PJM Interconnection, one of the country’s largest grid operators.

On top of that, Pennsylvania is part of the Eastern Interconnection, a network of more than a dozen smaller operating authorities that includes PJM Interconnection, whose footprint includes 13 states and the District of Columbia. That gives grid operators more flexibility to divert energy to parts of the country experiencing upticks in demand due to extreme weather.

The state also has a large natural gas supply it can rely on in a pinch, McGlynn said, whereas many Texas power plants were forced to operate at a fraction of their capacity because of a gas shortage that forced some companies to pay more than one billion dollars on the spot market to secure what little gas was available.

“In this part of the county, we’re used to the cold weather,” McGlynn said. “A lot of our facilities are already designed with much colder temperatures in mind. We plan for the peak seasons of the year all year long…We have the ability to rely on importing power from neighbors, and we also export to our neighbors during stressed conditions.”

Democratic Gov. Tom Wolf’s office did not respond to a request for comment about initiatives that could help shore up any potential problems with Pennsylvania’s power grid. However, McGlynn says he feels the overall power grid here is stable and secure, even if the state experienced a historic cold snap, propelled by a polar vortex– an event that has challenged Pennsylvania’s grid in the past.

And he is not alone in that assessment, as the nation’s grid monitor, the North American Electric Reliability Corporation, or NERC, outlined in an annual winter assessment that PJM Interconnection “expects no resource problems” this winter because “installed capacity is almost three times the reserve requirement.”

The Eastern Interconnection Planning Collaborative echoed those findings in its own state-of-the-grid report, issued last month.

“The Eastern Interconnection remains strong, and that the transmission planning activities have yielded a system that is reliable and well-coordinated on a regional and interconnection-wide basis,” the report said. “Going forward, continued vigilance and effective use of planning evaluations both today and in the future are essential to ensure that individual regional transmission plans and the impact of generator retirements and additions complement, rather than conflict with, the regional plans of neighboring Planning Coordinators.”

The Texas tragedy is instructive for grid operators across the county on how to avoid paralyzing blackouts, McGlynn said. And previously, PJM told DVJournal that the grid that serves Pennsylvania is becoming more decentralized, which also helps to prevent widespread outages.

“We do a lot from a lessons-learned perspective. We take reliability very seriously,” he said. “We do a lot to look at not only internally on our own lessons learned, but we look to the industry to see what happened in other parts of the country, and then we line up our processes and procedures and things we use to see how we can improve and what we should improve. We’re more reliable today because of it. It’s good to keep your eyes open.”

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