(The Center Square) – The region-wide electrification race means electricity prices will rise until energy supply can better meet demand.
This, according to PJM, the organization that manages the power grid for 13 states across the mid-Atlantic and the nation’s capital.
In a letter to the New Jersey congressional delegation this week obtained by The Center Square, PJM said that forces beyond its control – including decarbonization efforts and wholesale electricity prices – are driving the reality. As a government-regulated organization, there’s not much PJM can do to address the issues without federal approval.
“Power plants that generate electricity have been retiring due primarily to state and federal decarbonization policies, as well as economic pressures,” the letter said. “Simultaneously, demand is increasing due to the power requirements of data centers, electrification and a resurgence in U.S. manufacturing. When supply decreases and demand increases in any market, other things being equal, the result is an increase in pricing.”
It’s far from the first time PJM has drawn the connection between pollution reduction programs, like the Regional Greenhouse Gas Initiative, and spiking costs. As data centers, which consume as much power as a small city, proliferate across the region, the pressure rises.
In Pennsylvania, where roughly 30% of its power is exported to support neighboring states like New Jersey, natural gas and nuclear plants provide the reliable baseload to supply data centers, solar and wind power, and the widespread electrification of cars and homes.
It’s a luxury many other PJM states don’t have and it’s why critics of regional pollution programs, like RGGI, say the commonwealth can’t join.
The goal of RGGI is to lower greenhouse gas emissions, reduce climate impacts, and incentivize a transition to renewable energy.
RGGI states buy “credits” that cap how many tons of carbon dioxide they can release into the atmosphere. Producers that exceed their cap can buy credits from others in the pool, but the total amount available will decline each year until zeroing out in 2040.
That auction is called RGGI, and since 2009, its credits have collectively reduced greenhouse gas emissions 50% faster than the rest of the country and returned $6 billion back to its member states.
In Gov. Josh Shapiro’s first budget proposal, he counted on more than $600 million in revenue from the program to support investments in public assistance programs, tax credits, career incentives, and public education.
Many agree that Pennsylvania’s participation would be nothing short of a seismic shift. As the nation’s second-largest natural gas producer and leading energy exporter, embracing regulations meant to accelerate the transition away from fossil fuels alarms an unlikely coalition – natural gas developers, legislative Republicans, and labor unions – about the economic impact of carbon “taxing.”
But it’s also a prime target for reducing Pennsylvania’s carbon footprint and tackling climate change. The Department of Environmental Protection says modeling shows joining RGGI will slash carbon dioxide emissions as much as 225 million tons by 2030.
When Commonwealth Court struck down Pennsylvania’s entry into the program as an unconstitutional tax in November, Shapiro appealed. In the meantime, he introduced his own Pennsylvania-specific version of the program and urged lawmakers to pass it instead.
Whether within state borders or beyond, critics of RGGI said it still has the same problems: costing thousands of jobs by trying to regulate air that drifts freely and is uncontained by the program’s borders.
“We are talking about loss of jobs, which by the way has already occurred because of the uncertainty of the regulation … the shuttering of large parts of the whole industry,” said David Fine, an attorney representing power generators impacted by the program, during oral arguments before the state Supreme Court last month. “If that’s to happen, that should be a decision, a policy decision made by the General Assembly, not by the EQB and the DEP, but that’s not what happened here. This is unconstitutional.”
EQB is an acronym for the Environmental Quality Board.
