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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Already struggling to cope with higher energy bills, Pennsylvanians are now experiencing double-digit rate hikes this fall. In September, some suppliers increased electricity prices another 19 percent, citing inflation and energy costs. Pennsylvanians need relief, but Gov. Tom Wolf’s unilateral action will drive energy bills even higher. Worse yet, a new lawsuit highlights how Wolf’s plan—while claiming to help the environment—will, in reality, increase emissions.

Despite a majority opposition from the state legislature, Wolf is forcing Pennsylvania to participate in the Regional Greenhouse Gas Initiative (RGGI)—a compact in which member states impose a carbon tax on energy production. By discouraging energy production in Pennsylvania, the carbon tax would shut down some of the most efficient coal and natural gas operations in the world, and a new lawsuit argues that the governor’s plan will lead to an increase in CO2 emissions.

The petitioners, all of whom operate gas-fired power plants in Bucks, York, and Westmoreland Counties, are among the dozens of businesses, labor unions, trade organizations, and politicians asking the court to stop Pennsylvania’s participation in RGGI.

Pennsylvania natural gas producers are among the cleanest in the world, as measured by methane emissions from their operations. Of the top nine hydrocarbon-producing basins in the United States, the Appalachian Basin, which includes Pennsylvania, emits the least methane per unit of energy produced.

And while U.S. coal-fired plants are among the least polluting worldwide, Pennsylvania operators have invested billions of dollars in equipment to further reduce water and air pollution. The Homer City power plant, for example, spent $750 million over the past decade on reducing pollutants.

But RGGI would undo our progress toward cleaner energy by imposing prohibitive costs on Pennsylvania energy producers.

RGGI requires power plants to purchase carbon allowances, and those have more than quadrupled in recent months. For just a portion of 2022, estimated allowance costs have risen to $847 million from the Wolf administration’s original forecast of $198 million.

“The (administration’s) modeling of the price of CO2 allowances…was wildly off base,” wrote the petitioners. “Among other failures, the (administration) did not adequately consider the impact of speculative traders, like hedge funds, purchasing CO2 allowances as an investment.”

Costs imposed by RGGI will force Pennsylvania plants to decrease energy production, opening the door for less efficient plants in non-RGGI states to replace them. Overall emissions will increase because less efficient plants must burn more fuel to produce the same amount of electricity—generating higher emissions of carbon dioxide and pollutants like sulfur dioxide.

The petitioners note that “most of the benefits…arising from Pennsylvania joining RGGI will be lost or shifted to other areas due to increased emissions in other states.”

Prior studies have confirmed that transfer of emissions from RGGI states to non-RGGI states.

Quadrupling carbon allowance prices also means that RGGI will further inflate electricity costs. Energy producers will have to pass the increase in costs to consumers.

Moderate estimates see RGGI increasing consumer electricity prices by roughly $2 billion over nine years. This is a “best-case” scenario that Pennsylvanian families cannot afford.

RGGI is currently on hold thanks to a preliminary injunction, and the petitioners are integrating their lawsuit with other cases aimed at stopping the state’s participation. Due to pending court action, it is unlikely that companies will need to purchase carbon allowances until the next governor’s term.

But Pennsylvania’s participation in RGGI—with its far-reaching consequences—shouldn’t rely on lone-wolf tactics. The state legislature has taken the first step toward introducing a constitutional amendment that would prevent any governor from unilaterally imposing regulations, like RGGI, despite legislative disapproval.

If approved by the legislature and a majority of Pennsylvania voters, this constitutional amendment could safeguard families from ineffective and expensive regulations like RGGI.

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