One organization controls the electric power grid in 13 Mid-Atlantic and Midwest states, and its decisions influence how much you pay on your electric bill every month. But mismanagement by that organization, PJM Interconnection, is set to spike electric bills almost 60 percent over the next 10 to 15 years. Basically, PJM’s broken process is preventing developers from building new low-cost power plants, which is creating an ongoing cost crisis and inflating the profits of fossil fuel utilities at the expense of families and businesses.
Areas served by PJM. Source: FERC
However, a new modeling report (PDF) by Synapse Energy Economics finds that four key reforms could prevent this massive price hike. According to Synapse, PJM reforms that actually allow new power plants to connect to the grid quickly would cut the average household’s energy bills by $505 per year, compared to business-as-usual. The energy projects unlocked by these reforms would create 313,000 additional jobs each year across the region. But right now, PJM is holding back new affordable energy projects and the cost savings and jobs they would provide.
In short, it’s the interconnection queue, or the waiting list for new power to connect to the existing electricity grid. To build a new energy project, you need to get permission from PJM to connect to the grid. PJM has to study the project and make sure it wouldn’t overload the grid. But PJM’s study process is so slow that the average project is waiting over five years in the queue just to get this permission.
Those five years are on top of construction time and the time required to get permits from the government. PJM’s five-year wait time is longer than any other part of the country. That delay has created a huge backlog of projects waiting to be built. Over 3,000 energy projects (PDF) are currently stuck in PJM’s interconnection queue and are still unable to provide power. Over 90 percent of these projects are clean energy. That’s because the market knows cheaper and quicker clean energy is the future, but PJM is holding us back.
We need this new power. Electricity demand is rising—due to data centers, artificial intelligence (AI), and electrification—and we need new sources of cheap and reliable clean energy to meet it. PJM projects that electricity demand will increase in the region by a whopping 79 percent from 2025 to 2040.
With energy demand rising and energy supply stuck in the queue, cost increases are all but certain. New modeling from Synapse finally puts a number on the problem: Synapse finds that electric bills in the PJM region are set to increase by nearly 60 percent by 2036 to 2040—unless there are queue reforms that bring projects online more quickly.
By reforming the interconnection process and approving new energy projects more quickly, PJM can unlock low-cost power and reduce price hikes. How much can queue reform help? A lot, it turns out.
Synapse modeled two scenarios: a business-as-usual scenario where PJM’s interconnection delays continue into the future and a queue reform scenario where new projects are gradually approved more quickly. By comparing the two scenarios, we can quantify the impact of reforms.
Queue reforms could deliver $1,062 in savings per household per year in the long term (2036-2040). Source: Synapse Energy Economics
Queue reforms deliver significant savings across PJM compared to the status quo:
Solar and wind energy are the cheapest and quickest-to-build energy sources available. That’s why clean energy is over 90 percent of the current queue. By allowing the market to build what it wants, more low-cost clean energy, queue reforms minimize price increases and actually decrease power bills 7 percent below current levels in the long term. But if we leave it to business as usual at PJM, power bills are expected to increase by 60 percent in the same time period.
These cost savings are on average $505 a year across PJM states, with the specific breakdown listed below:
Queue reforms also cut carbon pollution in the PJM region by 825 million short tons through 2040, a 14 percent reduction. In the years 2036 to 2040, annual carbon pollution is 30 percent lower compared to business as usual, according to Synapse.
By enabling the construction of new energy projects more quickly, queue reforms would create direct energy and construction jobs. Lower energy prices for businesses and customers would also lead to indirect and induced jobs across the region. In total, queue reforms lead to the creation of 313,000 additional full-time equivalent (FTE) jobs per year, according to Synapse. That number includes 69,200 direct jobs in energy and construction from new energy projects. Additional economic activity spurred by these energy projects and by savings from lower energy bills also creates an additional 243,900 jobs.
Queue reforms are estimated to create more than five million FTE job-years from 2025 to 2040.
The cost savings and job creation that Synapse projects won’t just happen on their own. Achieving these benefits requires PJM to take concerted action in the near term.
Synapse’s modeling finds that additional projects do not come fully online and begin cutting costs until 2028 or later. But given construction and permitting timelines, PJM needs to act now to start bringing down costs even a few years from now. Given the need for federal regulators at the Federal Energy Regulatory Commission (FERC) to approve many changes, PJM must get serious about queue reform immediately. PJM should unclog the queue to cut costs for customers by implementing the following five reforms.
PJM must set mandatory study timelines at 150 days, in line with FERC requirements set out in Order 2023. Currently, PJM is asking FERC to approve a 480-day process instead—over three times longer—in its Order 2023 compliance filing. To achieve these faster timelines, PJM should implement interconnection study automation, following the lead of other regions, which have already shown leadership on this front. PJM has so far been slow to consider automation.
PJM needs to create a level playing field for energy storage. Right now, PJM wrongly assumes that battery storage projects will charge up during peak demand times when the grid is the most stressed—and accordingly requires these projects to pay ridiculously high costs for grid upgrades during the interconnection study process. PJM should also fully consider alternative transmission technologies that can reduce interconnection costs, including grid-enhancing technologies and advanced reconductoring. Currently, PJM is refusing to study these alternatives consistently.
PJM should make it easier to use extra capacity on the existing grid. PJM must allow developers to take advantage of interconnection rights held by existing power plants (Surplus Interconnection Service) and retiring plants (Capacity Interconnection Rights Transfer). While PJM has developed processes for these opportunities, the processes are still difficult to use. Projects that apply to Surplus Interconnection Service are not certain that they will be able to use the interconnection agreement after the existing plant retires, which makes it very difficult to finance projects using this pathway. PJM should link these processes to provide more certainty. In addition, the need for transmission upgrades is slowing down new projects, but there are many places on the grid with adequate transmission to develop new projects. PJM should create a fast track for projects to be built in areas with available grid capacity.
Many PJM votes currently occur via secret ballot. PJM should make all of its committee votes public to improve transparency of decisionmaking. Right now, many companies that own fossil fuel power plants are sabotaging their competition by slowing down interconnection queues and resisting reforms that would allow new, lower-cost, clean energy to come online. Transparency on these votes will help ensure voting is done in the interest of the public, not profits. PJM should also give consumer and environmental advocates proper representation within PJM’s board of directors and on PJM’s voting committees.
To fully fix interconnection challenges, including problems with projects dropping out of the queue after being assessed with high transmission upgrade costs, PJM should adopt the entry-fee model that has found success in MISO and SPP. Assessing an entry fee up front gives projects cost certainty and ensures that more of these projects can actually be built and begin to bring down costs.
The PJM region is facing significant challenges with rising electricity demand and the urgent need to build affordable energy quickly to address the climate crisis. Low-cost clean energy is ready to deliver—but only if PJM fixes the queue and allows it to come online. Customers in the PJM region stand to save thousands of dollars if we can get it right.
Charles is the power sector senior policy lead at Evergreen. He has dedicated his career to achieving ambitious climate action at the federal and state levels.
Medhini is the writing/editing digital lead for Evergreen. Through powerful storytelling, she hopes to help move the needle on climate policy and contribute to our collective fight for a livable planet.