Why Mid-Atlantic electricity prices are rising so fast
Blame the people who created a shortage of reliable electricity via anti-fossil-fuel policies, fix the situation by reversing those policies.
If you’re in the Mid-Atlantic area and frustrated about your rising electricity bills, here’s whom to blame and how to fix it.
(Summary: Blame the people who created a shortage of reliable electricity via anti-fossil-fuel policies, fix the situation by reversing those policies.)1
While most families around the country are seeing about a 5% power price increase this summer, the 13 states Mid-Atlantic states in the “PJM” grid region are seeing an average (population-weighted) increase of almost 10%, with New Jersey at 22% and DC at 33%.2
Why does the PJM grid region have significantly higher price increases than the rest of the US?
Because anti-fossil-fuel policies have prevented the region from building enough reliable electricity supply to keep up with demand—which is now surging thanks to AI data centers.3
Two types of anti-fossil-fuel policies have most disincentivized or even destroyed reliable supply.
1. Subsidies for unreliable solar/wind, which have taken away vital operating revenue from reliable plants.
2. Prohibitions on fossil fuel power, e.g., Biden’s “Clean Power Plan.”For years, PJM had more than ample reliable capacity thanks to overbuilding of gas plants in the early 2000s. But by destroying coal capacity and disincentivizing new gas capacity, PJM has found itself overwhelmed by new AI data centers, especially in Northern Virginia.4
The shortage of reliable capacity vs. demand resulted in much higher “capacity payments.”
Capacity payments are made to generators that promise to make their capacity available in the future. This is a key tool for ensuring that future demand can be met.5
Thanks to much higher capacity payments driven by anti-fossil-fuel policies, PJM has had record high prices this summer. Next summer’s will be even higher, due to increased prices in the forward-looking “capacity markets” that preserve reliable supply.
Looking ahead, PJM is expecting a continued bloodbath of coal and natural gas retirements while adding mostly unreliable solar and wind. This, in combination with increasing demand, will further reduce reliable capacity that can bid into the capacity market.6
Fact: Today’s and tomorrow’s price increases were baked into previous anti-fossil-fuel policies—including the solar/wind subsidies that some claim are the key to lower prices.
Subsidies for unreliable power disincentivized reliable supply, which then couldn’t meet demand.7Solution 1: Take legal measures to prevent the closure of additional coal and natural gas plants until the DOE, FERC, and grid regions can assure there is enough reliable generation to meet the winter and summer peak loads for the next few years.
Solution 2: Unleashing the upgrading of hundreds of existing reliable natural gas plants.
With such upgrades these plants can increase their capacity by upwards of 25% at relatively low cost, and quickly put more GWs on the grid during tight market conditions.Solution 3: For upgrading the capacity of existing natural gas plants, expedite any associated transmission upgrades to handle the extra MW so they can smoothly reach customers.
Note: Government must avoid pushing excessive transmission that further enables unreliable solar/wind—and thus increases future capacity prices further. Transmission expansion should solely focus on reliability needs, i.e. enabling access to reliable capacity.
Solution 4: Ensure natural gas pipeline permit reforms are enacted in permitting reform legislation to streamline the process so much-needed natural gas—especially in OH, WV, and PA—can affordably be available in the Mid-Atlantic area to meet the growing power demand needs.
Solution 5: Use batteries for capacity when cost-effective.
While solar/wind can’t add real capacity to the grid (they can go to zero at any time) batteries can add capacity during peak demand, and can reliably be charged by coal, gas, or nuclear plants during off-peak hours.Solution 6: Reform capacity markets to have a longer time-horizon.
Building reliable capacity requires the incentive of a consistent payoff over many years. Today’s capacity markets don’t offer that, and thus insufficiently incentivize reliable power.To the 67 million Mid-Atlantic residents in “PJM” region: you can have low-cost and reliable power, and meet the strategically important need of reliably serving the growing AI power needs.
But you need to demand an end to anti-fossil-fuel policies.
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It is imperative to get wind and solar off the grid because they are not fit for purpose to provide continuous power and they only got on by accident because nobody bothered to check the reliability of the wind supply and the meteorologists never issued wind drought warnings.
So now trillions of dollars have been spent around the world rolling out wind and solar infrastructure and we have got in return more expensive and less reliable power with serious environmental impacts.
The elephant in the room is the impact of severe wind droughts or dunkelflautes over continental areas, causing gaps in the contribution of windpower to the grid, that Paul Miskelly and Anton Lang documented in Australia over a decade ago.
https://rafechampion.substack.com/p/the-late-discovery-of-wind-droughts
Dirt farmers are alert to the threat of rain droughts, but the wind farmers never checked the reliability of the wind supply.
https://rafechampion.substack.com/p/we-have-to-talk-about-wind-droughts
Wind droughts become an existential threat to thousands or tens of thousands of people when the wind drought trap closes on a windless night during extreme weather conditions. See Texas in February 2021! Fluctuations in solar and wind input pose the same threat in the daytime where grids lack inertia, see the pain in Spain, 2025.
https://rafechampion.substack.com/p/defusing-the-wind-drought-trap
The Energy Realists of Australia have been saying this for years but we have not been effective in our public relations and media work because we are unfunded volunteers, mostly semi-retired engineers.
https://www.flickerpower.com/index.php/search/categories/general/list-of-briefing-notes
Great info as always Alex. Can you do, or have you done, a similar piece in the large increases in electricity prices forecast for Texas / ERCOT?
It looks even worse there and Texas has some of if not the largest Natgas production and reserves in the US.