Federal regulators should reduce the upcoming costs of PJM’s 2024 power market auction by $5 billion, says OPC complaint
BALTIMORE – Last summer’s record-breaking PJM capacity auction prices failed to reflect supply and demand conditions, allowed for anticompetitive market manipulation, and caused an enormous and unlawful transfer of wealth on the backs of ratepayers, the Maryland Office of People’s Counsel told the Federal Energy Regulatory Commission (FERC) in a complaint filed today.
“PJM ran a flawed auction resulting in prices that—unless corrected—will cost Maryland residential electric customers hundreds of dollars per year in unreasonable and unnecessary capacity costs,” Maryland People’s Counsel David S. Lapp said. “We are asking FERC to undo those unjust results and direct PJM to reset the prices for the 2024 auction by correcting the same flawed rules that FERC has already accepted the need to fix for future auctions.”
If successful, the complaint could reduce by over $5 billion the projected customer costs resulting from last summer’s price spike. OPC filed the complaint jointly with the Illinois Attorney General’s Office and the New Jersey Division of Rate Counsel.
PJM’s market for capacity intends to ensure sufficient power resources are available at least cost to meet reliability needs across the PJM region, which includes Maryland, 12 other states, and the District of Columbia. PJM’s 2024 auction—covering one power delivery year starting June 1, 2025—soared to $14.7 billion, a massive increase from the previous auction’s overall cost of $2.2 billion.
Immediately following last summer’s auction, OPC released a report showing the auction’s impacts on Maryland utility customer bills. The report addressed how PJM’s capacity market rules failed to count the reliability contributions for two Baltimore-area power plants—Brandon Shores and Wagner—even though the plants would continue to operate as “reliability must run” (RMR) units until their retirement. Not counting the RMR plants as supply contributed as much as $5 billion of the $14.7 billion auction cost, the report found.
With the next auction then just six months away, OPC and other state consumer advocates called on PJM to modify its capacity market rules to account for RMR units in future auctions so that customers weren’t forced to pay twice for reliability—once to keep RMR units online and then again through higher capacity market prices. PJM responded that it would be “counterproductive to try to change our market rules prior to the next [auction] to force RMR units to offer into capacity auctions.”
But after facing objections from OPC and others about its rules for future auctions, PJM eventually reversed course, seeking FERC approval to change its rules to account for RMR units in future auctions. To support the rule change, PJM acknowledged flaws in its old rules, and in February 2025, FERC approved the rule change for future auctions, noting that it would “avoid the risk” that customers will “pay twice for the same capacity.”
OPC’s complaint filed today addresses the prior 2024 auction, pointing out that—without FERC action—customers will pay twice for capacity starting June 1, the very result avoided by the rule changes for future auctions.
“The 2024 auction results ignore the significant ratepayer-funded reliability contributions of the Brandon Shores and Wagner plants—with devastating consequences to customers from the resulting extraordinarily higher capacity market costs,” Lapp said. “The Federal Power Act prohibits requiring captive utility customers to pay twice for the same service.”
The exclusion of the RMRs was just one of the problems with last summer’s auction, according to OPC’s complaint. Other market rules served to understate supply available to meet demand. PJM’s rules also failed to mitigate various market failures, such as the inability of new generators to connect to the PJM system, particularly with the short time—less than a year—between the auction itself and the delivery year. PJM’s independent market monitor, the complaint points out, found that the 2024 capacity auction was “significantly affected by flawed market design decisions.”
Although PJM has acknowledged many of the market rule deficiencies in other FERC filings, and FERC has approved other changes for future auctions, flawed versions of several rules were in effect for the 2024 auction, contributing to unlawful results, the complaint said.
OPC’s complaint, if successful, would substantially reduce the bill impacts customers will face starting this June from last summer’s capacity market auction. The average Baltimore Gas & Electric customer could see the anticipated bill increases from the 2024 auction reduced by about 65 percent, from $16/month to about $5.50/month, with residential customers of other Maryland utilities also seeing bill impacts reduced by more than 50 percent. The complaint also seeks customer credits for the RMR plant’s capacity revenues, consistent with the new PJM rule that FERC approved, that could lower rates further.
Under ratemaking procedures, FERC could decide to address the complaint after June 1, leaving the high prices in place, and provide refunds later if the complaint is successful.
Aside from increased rates from the auction results, Maryland customers face additional rate increases to pay the costs for the RMR arrangements. OPC is separately litigating before FERC the costs of keeping the RMR plants on line.
The Maryland Office of People’s Counsel is an independent state agency that represents Maryland’s residential consumers of electric, natural gas, telecommunications, private water and certain transportation matters before the Public Service Commission, federal regulatory agencies and the courts.
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