State Legislators Call for PJM to Stop Charging Consumers Extra for Over-Procurement of Wasted Energy
June 16, 2022
State legislators from all PJM states call on the regional transmission organization to do more to right-size capacity procurement. PJM states include part or all of Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, and West Virginia.
Currently, PJM is consistently over-purchasing energy generation by as much as double what is needed. In 2021-2022, PJM’s over-procurement cost consumers $4.4 billion in unnecessary capacity, with many of the contracts going towards otherwise uneconomic fossil fuel plants. The majority of these plants are located within five miles of an environmental justice community.
Now that the PJM Board is undergoing a review of its practices, it’s time to resolve this problem.
“I equate PJM’s practices to buying perishable fruit. If you only need a certain number of apples, with a few extra just in case, you don’t need more than that,” said Ohio State Representative Kent Smith. “Even if you get a really good deal on buying even more apples, you’re still wastefully spending money that didn’t need to be spent on apples. PJM procuring so much extra generation beyond the buffer is a waste of ratepayer money.”
There is simply no reason for consumers to be paying billions extra for long-term oversupply that brings so little benefit. PJM leadership has already acknowledged that the capacity over-procurement is harmful to consumers. It’s time for PJM to put their words into action and take steps to right-size the capacity market.
This letter was spearheaded by Representative Kent Smith. The full letter can be viewed here: https://www.ncelenviro.org/app/uploads/2022/06/NCEL-Over-Procurement-Letter.pdf
Created by and for state legislators, the National Caucus of Environmental Legislators is a 501(c)(3) nonprofit that organizes over 1,200 environmentally-committed state legislators from all 50 states and both parties. NCEL provides venues and opportunities for lawmakers to share ideas and collaborate on environmental issues.