On July 16, Gov. Phil Murphy and eight other governors from states that are part of PJM Interconnection’s regional transmission area have sent a letter to the PJM board of managers, raising concerns over the direction and leadership of the electricity grid operator.
The July 16 letter comes as the annual PJM capacity auction is underway, a process that will contribute significantly to electricity supply prices in the 2026-2027 delivery year.
Speaking of intertwined reliability and affordability crises, the governors said PJM “faces an unprecedented crisis of confidence from market participants, consumers and the states.” They added that “across the region, discussions of leaving PJM are becoming increasingly common.”
A major goal of the communication was to gain influence in the filling of two vacancies on the PJM board. The grid operator also faces the imminent departure of its chief executive officer, opening another vacancy about which the governors would like greater say.
The letter states: “It is imperative that you select widely respected leaders who are intimately familiar with the PJM region and its challenges.” Such action, the letter continues, “would itself begin to restore public confidence in PJM.”
The governors even bring this issue to the board ready to themselves supply the candidates. The letter says, “Fortunately, we are aware of several such candidates who could form a balanced, bipartisan slate, representing a new vision for PJM engagement with the stakeholder community and with our collective states.”
The governors wrote that their representatives are ready to meet with the PJM nominating committee at the already scheduled PJM members meeting in Valley Forge, Pennsylvania, on July 23.
The governors contend that “these two board seats must remain dedicated to candidates who are proposed by the states.” The letter proposes the long-term alteration of two seats on the PJM board so that they will be filled in the future by state-recommended candidates.
The letter continues with a plan for greater insertion of the states into the regional grid operator’s governance by stating that the governors “are committed to increasing our engagement on these important issues by creating a formal group of the PJM governors to complement the existing valuable input from OPSI.”
OPSI is a Delaware nonprofit corporation formally called The Organization of PJM States, Inc., which acts as a liaison between its member states and PJM. It is composed of a set of state utility regulatory agencies. N.J. Board of Public Utilities Commissioner Zenon Christodoulou is the Garden State representative.
PJM responded to the letter on July 18.
The grid operator agreed to meet with the representatives of the states on July 23. The reply also thanked the governors for their willingness to supply a potential slate of candidates but said the issue of candidates was one for the nominating committee and not the board of managers itself.
PJM also pointed out that many of the changes proposed in the letter from the governors would require a change in PJM’s operating agreement, which is not something that just the board of managers can agree to independently.
In responding to the characterizations in the letter concerning PJM’s work, PJM took the opportunity to highlight what it considers the organization’s successes of the last couple of years, resulting in 46 gigawatts of generation approved for construction, 17 GW expected to be approved by the end of the year, and 46 GW by the end of next year. A gigawatt is equal to 1,000 megawatts.
PJM also responded to a request for further comment from the Herald by saying, “PJM’s board appreciates the governors’ engagement and has responded directly. While perspectives may differ, PJM remains focused on its core mission delivering reliable, affordable power to 67 million people and navigating complex stakeholder priorities with transparency and integrity.”
The “crisis of confidence” in PJM referenced in the letter has been abetted in New Jersey by Murphy’s public comments. The governor has accused PJM of negligence and even market manipulation.
Faced with angry ratepayers in an election year, the New Jersey Assembly, with all 80 seats on the ballot, initiated legislation that passed both houses. That legislation requires the BPU to investigate PJM.
PJM mismanagement, misconduct or both are part of the narrative Democrats in the state are pushing as the source of the price predicament facing ratepayers/voters. State Republicans have laid more of the blame at the feet of the Murphy administration’s energy policies.
There are multiple perspectives outside of state government on the letter and the insertion of the governors into the governance of the regional grid operator.
Advocates of energy policies directed at mitigating the impact of climate change see the action by the governors as a positive. One such group, Evergreen Action, put out a press release in which their deputy state policy director, Julia Kortrey, said, “The era of business as usual at PJM is over.”
The statement accuses PJM of long protecting utility and generator profits at the expense of the people that it serves. The statement adds: “We applaud these governors for stepping up and calling for the accountability and reform PJM desperately needs.”
The Electric Power Supply Association, a national trade association representing competitive power suppliers, responded to a request for comment through its president and CEO, Todd Snitchler. Snitchler said: “PJM cleared nearly 50,000 megawatts of new generation through its reformed interconnection process, yet those projects remain stalled due to factors outside PJM’s control.” Among those factors, Snitchler said, are things like “siting, permitting, supply chain issues and local opposition,” factors better dealt with by the governors than the grid operator.
Snitchler goes on to say that “PJM’s capacity auction is an effective tool to ensure grid reliability at reasonable cost. And while improvements are needed, undermining competitive markets through political pressure or artificial price caps will only deter the investment we urgently need.”
Contact the reporter, Vince Conti, at vconti@cmcherald.com.
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