Pallone Calls on FERC to Investigate Recent PJM Capacity Auction

Long Branch, NJ – Congressman Frank Pallone, Jr. (NJ-06), the top Democrat on the House Energy and Commerce Committee, today sent a letter to Federal Energy Regulatory Commission (FERC) Chairman Mark Christie urging the commission to investigate the most recent capacity auction conducted by PJM Interconnection—New Jersey’s regional power grid operator. The results of the auction will cause energy prices across the Mid-Atlantic to increase this summer. Pallone wrote in support of New Jersey Governor Phil Murphy’s April 16^th letter expressing similar concerns regarding PJM’s role in dramatic price increases on New Jersey ratepayers set to go into effect this summer.

In the most recent auction, PJM-wide capacity prices increased by more than 800 percent, which will ultimately force ratepayers in New Jersey and throughout the region to face triple digit annual cost increases starting in June. The higher costs will be locked in for the next three years and passed directly on to consumers.

“I urge the Federal Energy Regulatory Commission’s (FERC) enforcement division to investigate the recent capacity market auction and the dramatic increase in prices that occurred. As you are aware, in the 2025/26 capacity auction, PJM-wide capacity prices leapt from $28.92 per megawatt-day to $269.92 per megawatt-day – an increase of more than 800 percent. At the end of the day, those price increases must be paid for by families across the entire PJM region.” Pallone wrote.

Pallone followed up on these concerns at an April 30 Energy and Commerce Subcommittee hearing, stating “I want to once again note that my constituents in New Jersey are facing a triple-digit annual increase in their power prices.  Just yesterday, I sent a letter to the Chair of the Federal Energy Regulatory Commission, backing up a request from New Jersey Governor Murphy that FERC investigate the most recent capacity auction that is at the root of New Jersey’s price increases. The price increases facing New Jerseyans are due to the incompetence of PJM, the region’s grid operator.  PJM has simply been too slow to hook up new energy to the grid.  Once PJM has installed its new leadership, it needs to explicitly focus on getting as much power onto its grid as quickly as possible.”

On April 24, Pallone sent a letter to PJM demanding swift action to fix its broken process for connecting new renewable energy projects to the grid. Pallone warned that PJM’s delays are driving up electricity prices across the state, with ratepayers facing triple-digit annual cost increases starting in June as a result of the latest capacity auction.

The full letter to Chairman Christie can be found below:

April 29, 2025 

The Honorable Mark C. Christie

Federal Energy Regulatory Commission

888 First Street NE

Washington, DC 20426

Dear Chairman Christie: 

 I write in support of New Jersey Governor Phil Murphy’s April 16 letter to express concerns about the results of PJM’s most recent capacity auction.^[1]  I urge the Federal Energy Regulatory Commission’s (FERC) enforcement division to investigate the recent capacity market auction and the dramatic increase in prices that occurred. 

 As you are aware, in the 2025/26 capacity auction, PJM-wide capacity prices leapt from $28.92 per megawatt-day to $269.92 per megawatt-day – an increase of more than 800 percent.^[2]  At the end of the day, those price increases must be paid for by families across the entire PJM region.  While I would be concerned about such a radical price increase under any circumstances, I am particularly distressed by the conclusion of PJM’s independent market monitor that “the results of the 2025/2026 RPM Base Residual Auction were significantly affected by flawed market design decisions…”^[3]

 In the light of the warning by PJM’s independent market monitor, I want to express my thanks to FERC for working diligently on a slate of reforms to PJM’s market structure for the next capacity auction.  These include proposals to recognize the capacity contribution of certain reliability must-run units and a temporary price cap and floor mechanism negotiated by PJM state governors.^[4],[5]  The reforms, while not entirely sufficient to alleviate the higher costs, will help restructure the capacity market to adequately incentivize power generators to connect new energy projects without sticking ratepayers with even higher costs.

While changes to upcoming capacity auctions are important, it is also critical in the medium-term that PJM makes progress complying with FERC’s recent rules on interconnection reform and long-term regional transmission planning.  PJM has submitted a compliance filing for Orders 2023 and 2023-A, and, in July, FERC informed PJM that it required additional information in order to render a ruling on PJM’s compliance filing.^[6]  My understanding is that PJM purports to have satisfied FERC’s request for information but that multiple parties contend that PJM’s filing continues to be deficient.^[7],[8]  I hope that FERC can issue a ruling soon on PJM’s compliance filing – either accepting the filing if it deems it in compliance with FERC’s regulations or denying it and mandating changes in order to bring PJM into compliance.  Either way, families in the region are depending on PJM speedily complying with Orders 2023 and 2023-A.  Similarly, I hope FERC can act expediently once PJM eventually submits its compliance filing for Orders 1920, 1920-A, and 1920-B. 

Finally, thank you for your acknowledgment of Governor Murphy’s letter.^[9]  As a former state regulator, you know more than anyone how electricity costs impact the lives of families.  I certainly hope that FERC’s upcoming technical conference in June can focus not just on reliability, but on consumer costs as well.  I look forward to working with FERC and PJM’s new incoming leadership team to ensure that electricity remains reliable and affordable throughout the region.  Thank you for your attention to this matter.

Sincerely,