PJM Opens Market Overhaul Debate With Report Outlining Three Paths

Overview

• PJM, which runs the power grid and markets for 67 million people from the Midwest to the Mid-Atlantic, released a report called Powering Reliability Through Market Design that launches a formal rethink of how its markets ensure enough power.
• The paper lays out three options: keep a shared reliability standard with longer forward contracts, set different reliability levels for different customers or areas, or lean more on real-time energy and services prices with long-term energy deals and a smaller capacity backstop.
• PJM says its capacity market, the auction that pays plants to be available, is stuck in a credibility trap because high scarcity prices trigger political intervention that then scares off new investment.
• The report cites rapid data-center demand, higher capital costs, longer construction timelines, and policy swings as reasons investors now seek long-term revenue certainty before building new generation.
• PJM calls for a transparent process with states, FERC, utilities, generators, investors, and consumer advocates, as critics press for near-term fixes, capacity price caps now extend through 2029, and some warn of supply shortfalls as soon as 2027 that could mean higher bills or more curtailments if reliability is tiered.