How to Fix the Broken PJM Supply Market
Industry
Exelon’s ability to supply reliable and affordable energy is at an inflection point. The question isn’t whether demand is rising, it’s whether the system is built to respond.
Amid skyrocketing energy demand and limited supply, there’s a growing recognition that the current PJM supply market is broken and failing customers. We know customers are frustrated with rising energy costs – we are too. We’re working every day to keep bills as low as possible while continuing to deliver the energy families and businesses need. That’s The Exelon Promise.
So, What’s Broken in PJM’s Energy Supply Market?
This is a simple supply and demand challenge, and until incentives shift to support increased energy supply, customers will continue to face higher costs.
- Unprecedented demand paired with limited supply is driving up energy supply costs.
- The spike in prices paid to current generators, plus PJM market rules means that companies generating power have no incentive to produce the additional supply that would bring costs under control.
- Customers are facing increased supply costs with no additional value for their money.
- Further, tight supply margins and delayed infrastructure additions are heightening reliability risks in PJM, especially during peak demand periods.
What’s Driving the Problem?
In a recent Utility Dive piece, President of Power for Tomorrow Brad Viator argues that the issue is structural. Markets like PJM’s aren't incentivizing the new generation needed to meet demand.
“It’s easy to blame insatiable data center demand, but the real culprit is a market structure fundamentally incapable of dealing with demand growth. In competitive electricity markets like PJM, independent power producers face a perverse incentive when it comes to building new generation. If an IPP already owns power plants in PJM, why would they invest in new capacity that would lower wholesale prices and devalue their existing fleet? The answer is simple — they won’t. And, as the numbers show: they aren’t. This is a PJM feature not a bug: The market actively discourages exactly the investment needed to meet surging demand. Existing generators have every reason to keep capacity tight and prices high,” said Viator.
How Do We Fix It?
There’s no single solution but increasing supply has to be part of the answer.
One way to do that, reliably and with oversight, is utility-generated power: allowing public utilities to plan, build, and operate generation under state oversight.
Why Utility-Generated Power Works
- Brings more supply online, helping ease pressure on prices.
- Builds supply at lower costs to customers.
- Strengthens accountability through public oversight.
An independent analysis by Charles River Associates found this approach could save customers between $9B and $20B annually while improving reliability.
Brad Viator from Power for Tomorrow notes:
“Regulated utilities have the planning authority, cost allocation tools, and regulatory oversight to manage explosive load growth without destabilizing rates for existing customers. They can build new generation, upgrade transmission, and allocate costs transparently through state commission proceedings where ratepayer advocates, intervenors, and the public have a voice. Utilities have an obligation to serve and a regulatory mandate to plan for the long term — not just maximize short-term profits.”
The Bottom Line
Exelon’s ability to supply reliable and affordable energy is at an inflection point. The question isn’t whether demand is rising, it’s whether the system is built to respond.
Controlling costs starts with ensuring the system reliably supplies the electricity that customers need, so we have access to enough energy to keep the lights on and rein in costs for families and businesses.
Exelon is working hard and putting our customers first. Learn more about the actions we’re taking to keep bills as low as possible through the Exelon Promise.