By Gordon Tomb
Gov. Josh Shapiro’s proposal to cap electricity prices could, perversely, lead to higher customer bills and a greater risk of blackouts, according to America’s Power, a trade organization of coal-fired power plants.
Following negotiations with the governor, power grid operator PJM Interconnection submitted a plan to the Federal Energy Regulatory Commission (FERC) to restrict prices for two years—a period that would extend, coincidentally or not, beyond Shapiro’s 2026 reelection campaign. On April 22, FERC approved the settlement.
As usual, the governor ran a premature victory lap. Shapiro called a $14.7 billion boost in electricity costs last year the “largest unjust wealth transfer in the history of U.S. energy markets.” The price cap would provide nearly $22 billion in savings, the governor claimed.
However, the higher prices at last year’s PJM auction resulted from the rising demand for electricity and a shortage of producers willing to offer new supplies. The auctions are intended to replicate a market where prices rise and fall with the differential between supply and demand.
In a protest filed with FERC, America’s Power stated the PJM “proposal to appease Gov. Shapiro may superficially sound attractive as a way to help consumers during tumultuous economic times, but that is merely its aura, not its reality.” The trade group raises the specter of “catastrophic consequences” from PJM’s “game of reliability Russian roulette.”
America’s Power may sound hyperbolic. But in the context of more than 200 deaths in Texas from blackouts due to a lack of reliable generation and fuel, lawmakers must take the trade group’s cautionary words seriously.
Other organizations have issued the same warning.
“The governor’s proposal is dangerous because it numbs the market to price signals, which is how investment in new generation capacity is directed,” said David Taylor, CEO of the Pennsylvania Manufacturers’ Association. “In doing so, he would damage an already compromised electricity market, further undermine grid reliability, and potentially get people killed when the power goes out.”
Overseeing the electricity transmission across 13 states, PJM has issued multiple warnings of power shortages in the region within the next few years. Those warnings result partly from the forced closure of coal-fired plants by regulations and wind and solar subsidies augmenting the market. Instead of attracting new energy sources, the price cap would accelerate the shutdowns of highly reliable coal-fired plants that can keep months of fuel supplies on-site for emergencies, according to America’s Power.
Because their operations are weather-dependent, wind turbines and solar panels cannot match the reliability of units fueled by coal, natural gas, or nuclear energy. As more reliable facilities retire, most new proposals to PJM call for new generation from wind and solar operators.
PJM, said America’s Power, has sacrificed its role as a market manager in yielding to Gov. Shapiro’s complaint: “PJM, disappointingly bowing under the weight of state-imposed political pressure rather than standing up to protect market integrity and reliability, submitted a proposal that may lead to catastrophic consequences.”
Let’s be clear: The negotiated price cap does not save money; it only limits cost increases.
“Rates will continue to rise even under this agreement,” said state Sen. Joe Pittman.
In other words, Shapiro’s intervention will likely prolong the period of rising prices. If the governor continues his war on reliability with carbon taxes and enhanced subsidies for unreliable energy sources, the gap between demand and supply will increase prices even further.
The lack of new reliable generation could force PJM to use expensive “reliability must-run” agreements. These agreements enable plants shutting down for economic reasons to continue to run by compensating them at relatively high prices, according to America’s Power.
In short, bad state policies limit electricity supply and drive up your utility bills. The PJM settlement will exacerbate this problem.
Power shortages are of particular concern in winter or summer when extreme temperatures pose significant risks to people. In addition, price spikes are more likely during cold spells when home-heating demands compete with power plants for natural gas. During a January polar vortex, coal plants potentially avoided as much as $1.4 billion in increased costs and provided more than 40 percent of the additional energy needed to warm homes and businesses, America’s Power claimed.
The FERC-approved Shapiro–PJM settlement boils down to one question: What good are lower prices if there is no electricity when it’s most needed?
This commentary was first published at DV Journal on April 28th, 2025.
Gordon Tomb is a senior advisor with the CO2 Coalition.
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Perhaps we need a competition with a big prize for the person with the best plan to get politicians out of commerce. Most of our current energy problems were invented and/or approved by politicians with no significant experience in energy production and use.
The prize? People could chip in according to their means. In terms of the old joke, I’ll contribute a couple of gallons. Geoff S
The concept of limited government used to do that. It’s the idea that government is the go to solution for any time when the market doesn’t produce the results that those in power want, that has doomed us.
Socialism has never worked anyplace it has been tried.
You can’t effectively debate a socialist on the basis of socialism’s ‘ends’, i.e., that it ‘doesn’t work’, but you can pound the hell out of them on the basis of its ‘means’:
https://mises.org/mises-wire/socialists-it-doesnt-matter-if-socialism-works-what-matters-power
✓ ?I don’t understand. I thought the cost of renewables was now well below that of FF generated electricity. Why are politicians granting rate increases to utilities for adding low-cost capacity
They have to raise prices before they can lower them.
They have to destroy the economy before they can save it.
Just goes to show that even the most ‘moderate’ Democrats are full-blown collectivists at heart. What I find puzzling is how the governor of one of the 13 states that comprise PJM can negotiate a system-wide pricing scheme. Hopefully, FERC will tell PJM (and Shapiro) to pound sand.
“What I find puzzling is how the governor of one of the 13 states that comprise PJM can negotiate a system-wide pricing scheme.”
I was wondering that myself.
Most Democrats are deranged, or they wouldn’t be Democrats. They are divorced from reality and live in a very scary Bizarro World. They are so divorced from reality that they are a great danger to the rest of us. Unfortunately, there are a lot of them.
Dems are very happy with market interference, even though it has proven to worsen the situation time and time again.
Apparently, FERC has gone along with this: “On April 22, FERC approved the settlement.”
Yes, and thanks for the link to the FERC order. It will be interesting to see if the negotiated cap and floor mechanism attracts sufficient new capacity. If not, ‘Plan B’ will be to make whatever ‘must run’ payments are necessary to keep some of the outdated / retired plants on-line.
I just knocked Josh Shapiro down 3 notches on the sensible scale.
That moves him below neutral. 😒
Doesn’t Shapiro look like Monk? He must not be a dynamic speaker though, as the guy in orange, that looks like he was just released from a mental ward to attend this speech, had to punch himself to stay awake.
Name a sensible Democrat.
The only one I can think of is U.S. Senator John Fetterman. And from what I’ve heard, he only became sensible after recovering from the stroke he had.
I can’t think of another sensible Democrat.
Even Fetterman is sensible only part of the time. He voted with almost all the other Democrats to allow men to compete in women’s sports.
Yes, he does vote the wrong way, which empowers the Radical Left.
Sure, because wage and price controls worked so well when Nixon did it.
This smells bad, like a violation of the Constitution’s Commerce Amendment.
Pretty close to axiomatic that price controls lead to shortages. This is likely to backfire on Shapiro, as the economic distortions mount.
He’ll blame it on Trump and the power companies, and the media will back him.
This is true. Standard Operating Procedure for Democrats and the Media.
So far, 92 percent of Media coverage of Trump has been negative coverage. It was 89 percent negative coverage in Trump’s first term.
The Leftwing Media is outdoing itself with lies and distortions about Trump and conservatives.
It’s not surprising that 72+ million people voted for Kamala Harris. The Leftwing Media is the best weapon the radical Left has, and it is very effective, although not quite enough to swing the last election, but much too close for comfort.
The Leftwing Media is the most dangerous organization there is when it comes to taking away our personal freedoms. They are a clear and present danger.
Price control is the last bastion of the political scoundrel. It’s like this numpty- Gummint can attempt to control price or quantity but never both at the same time. The brains trust in Canberra is discovering that at present with tobacco excise pricing and controls and now nicotine vapes as Oz repeats the Al Capone days of booze prohibition while escaped cocaine washes up on east coast beaches. It’s a lot like electricity with inelastic demand you idjits.
The continued promotion of windmills and industrial solar as a viable substitute for conventional generation (coal, natural gas, and nuclear) is the real problem.
Windmills and Industrial Solar are not the solution to our problems, they, and the fools that promote them, are the cause of our problems.
All this insanity is being done to reduce CO2 levels, when there is no evidence that CO2 levels need to be reduced.
There are a lot of deranged people in this world, and a lot of them are in positions of power. That’s our real problem.
Joshie said he was going to kill coal, just as Barri and Sleepy Joe did, and that is exactly what he is doing at every turn. This deal is going to drive cost of electricity in PA up, which is exactly what Joshie wants. Then he can campaign on his plan to lower electricity costs in PA, all the while he is personally profiting from the whole scheme. How is it legal for a politician who is regulating energy industry to be heavily invested in same?
How is it legal? The politicians are the ones who wrote the laws in the first place. Wherever they can, they always exempt themselves.
And that is shit that has to be brought to a screeching halt.
Possible future: 47 of 48 states achieve net zero, 1 of 48 states gets rich selling electricity?
He needs to study just how effective price-capping has been in the UK to keep energy bills down…
It worked great in Venezuela and especially Cuba.
If you assume that the purpose of price caps, is to control prices, they always fail.
If you assume that the purpose of price caps is to enrich politicians and keep them in power …
Why didn’t he put “price caps” on eggs, or houses, or cars?
Price controls have never worked and can never work.
However, they are the go to solution for those who consider themselves smarter than everyone else.
Spain and Portugal.
’nuff said.
Venezuela
Funny story.
After getting out of the USN, my first commercial job was a nuke startup in PA. for readers not from rural PA, it is a hard place with friendly people. In that area, coal was played out and an oil plant was was at full capacity.
My job was almost done with the scam from 100% power on my shift and midnight. The grid operator blew gasket. do you know how many will die if we lose another power plant?
My next job was in Spain but I got a bill from my old address.
The PUC would not let the utility put the new nuke in the rate base to project the customers. The utility apologized to the rural customers saying that they had to sell the power with no fuel adjustment factor to NYC,
NTC!!!!!!
For the record, when I was in Spain there were lots of blackouts without renewable energy. That is ok. Spain is not a hard place with good red wine to enjoy when the lights go out.
currently I am enjoying a red WA state wine. Also not a hard place.
Texas is not a hard place either. A had place does not lose power every 20 years.
Hard places are hard every day and know how to keep the power on.
We’ve had energy price caps here in the UK for a while now and it’s not helped. It’s a bit like our minimum wage laws, where inevitably everyone in low paid jobs like shop assistants, cleaners etc are paid the minimum wage and they only get a rise when the government says so. Consequently there’s no incentive to work harder or be paid what your worth.
The energy price cap is reviewed every 3 months but energy companies try to tie you into 12,24 month contracts so it ends up as a bit of a lottery as to whether you save money or no. All the companies prices are roughly the same it’s just there customer service that differs.
The quango that oversees this racket is called Ofgen and they are full of ex-company execs and they are rubbish.