PHILADELPHIA—Ninety-eight years ago, the nation’s largest power grid operator was founded here by utilities serving Pennsylvania and New Jersey. On Monday, Pennsylvania Gov. Josh Shapiro threatened to pull his state out of the coalition. 

“It is time to get serious about making significant reform,” Shapiro said, at a conference he convened with representatives from all 13 states now in the grid to “chart a new course” for operator PJM Interconnection.

“If PJM refuses to change, we will be forced to go in a different direction,” he said. 

Pennsylvania is the largest energy producer in the grid. Its absence would impact electricity consumers across the region, which stretches from Illinois to North Carolina.

In a statement to Inside Climate News, PJM spokesperson Dan Lockwood said that “meeting the demands of a rapidly changing energy landscape will require solutions that extend beyond any one institution.” 

“It will require PJM, the industry and especially our states all working in concert,” he said.

Asthana, PJM’s CEO, emphasized the scale of change that will be necessary to meet the challenges of powering AI now and in the future, not just at PJM but across the country. “If we’re going to win this race, I think we need to think differently,” he said.

What’s not clear is whether, or how, states leaving PJM would lead to a more affordable or reliable system.

Most of the power plants in PJM compete on an open market as a result of decisions by lawmakers in various states in the 1990s and 2000s to introduce more competition into the electricity sector. This restructuring meant that regulated utilities were limited to providing the delivery of electricity, while independent power producers would build and operate power plants.

Representatives of independent power producers said on Monday that they can understand the frustration with PJM, but they don’t see how it solves anything for states to leave.

“While we continue to stand in favor of common-sense reforms that will improve power market functionality, grid reliability, and consumer affordability, the actions taken by some elected officials do nothing more than disrupt PJM’s ability to do its job,” said a statement from Todd Snitchler, president and CEO of the Electric Power Supply Association, a trade group whose members include independent power producers.

Jon Gordon, director at Advanced Energy United, a trade group that represents advanced generation technologies, said despite PJM’s high prices, participation within the regional grid provides more efficiency and competition for electricity sales, which keeps costs lower for ratepayers. The regime used prior to PJM’s shared marketplace allowed utilities to overbuild with less incentive to keep prices in check. 

“I don’t think anybody wants to go back to that. … We just need to make improvements so we get all the benefits of competition but none of the inefficiencies,” Gordon said, adding that a PJM departure may mean state agencies could have to negotiate contracts with producers. “If these studies are fair and unbiased, I think they’re going to show it’s pretty risky to leave PJM and there’s probably not enough benefit to justify the potential risks.”

The challenge with PJM is the political diversity of the region that includes Republican West Virginia and Democratic New Jersey, compared to more ideologically homogeneous New England, Gordon added. The governors in the PJM region have now realized they don’t have much influence over decisions affecting how new generation sources get onto the grid. 

“I think the states are completely different on whether it’s fossil or renewables generation,” Gordon said. “But they all agree that they want a voice, and they want lower prices.”