Lawmakers say state positioned to weather expected PJM shortage

Ohio has the resources to meet an expected energy capacity shortfall, a trio of key lawmakers concluded one day after PJM Interconnection released the results of its latest capacity auction.

The chairs of the House and Senate Energy committees both touted improved generation capabilities through a 2025 energy law (
HB 15

) at a time when demands surge for the regional transmission organization.

PJM announced Tuesday that its latest auction had secured 138,318 megawatts of capacity generation, an amount that fell short of the grid operator’s reliability requirement by 6,831 MW.

That shortage, and the fact that capacity prices again hit the capacity price cap authorized by the Federal Energy Regulatory Commission, was no surprise to Rep. Adam Holmes, R-Nashport, or Sen. Brian Chavez, R-Marietta.

Holmes, who chairs the House Energy Committee, said in an interview that HB15 is intended to “incentivize new generation as much as we could to help…avert this crisis.”

“I think we have seven or eight now new generation contracts in line that's really going to help in the market forces,” he said.

For Chavez, chair of the Senate Energy Committee, the auction proved the importance of the Legislature’s work in finding those solutions.

“I think that's what Ohio is doing — is setting the stage to do the generation here, utilizing our workforce, our economy, our natural resources and our infrastructure,” he said.

The 2028/2029 capacity auction established a price of $325 per megawatt day, dropping from the price of $333.44 per MW day seen during the prior auction finalized in December.

Still, Rep. Tristan Rader, D-Lakewood, said prices remain too high for consumers. He pointed to data centers as the culprit for those higher utility bills.

Rader also noted that the capacity shortage comes as new generation lags, which he said will only further escalate prices.

“We need to remove the policy barriers,” Rader said, particularly emphasizing a 2021 energy law that allowed counties to ban solar and wind development.

Through that law, he said, “artificial barriers” are hindering the development of those resources. “And at the end of the day, you're causing rates to go up.”

House Speaker Matt Huffman, R-Lima, shortly after HB15's passage, floated the idea of Ohio leaving PJM following a round of historic price increases over several capacity auctions.

Still, policymakers, although calling for more robust engagement with the regional transmission organization, have repeatedly acknowledged this session that would be a costly prospect.

Rader described leaving PJM as a problem in search of a solution.

“Leaving PJM, creating our own system, isn't going to solve the need for more generation,” he said. “It's not going to solve the need for a system that's going to allow these energy types to compete and fill in the gaps where we do that. It's not going to solve the fact that we have more data centers coming online than ever, and they're driving costs up on the distribution side too, and on the transmission side.”

Holmes added that “having that broad network of resources available for energy is very helpful, and that maintains that resiliency and flexibility that we want.”

At the same time, he acknowledged that being part of PJM can cause Ohio to be impacted by other member states’ energy policies. That can be “counterproductive to our goals,” he said.

To help address capacity concerns, PJM remains within an expedited rulemaking effort that seeks to connect data centers to the grid without causing resource shortages.

Among a host of proposals, PJM is contemplating a reliability backstop procurement plan that aims to prevent an expected energy shortfall. The operator could also partner with state-led programs to better manage the grid during times of stress.

Chavez lauded those efforts, saying, “I do think PJM is trying to be responsive to the concerns of the states in the network, and they're trying to modify their auction process, and improve the forecasting.”

Other state groups also weighed in on the capacity auction, including the Ohio Manufacturers’ Association, which claimed the grid operator is “manufacturing scarcity on paper.”

The Ohio Consumers’ Counsel similarly expressed disappointment that procured supply did not meet demand.

“Even with capacity prices hitting the maximum allowed under the FERC-approved price cap, PJM still failed to procure enough resources to meet its reliability target,” Consumers’ Counsel Maureen Willis said in a statement. “Consumers should not have to pay record-high prices and still face growing reliability concerns."