Critics argue approved proposal from Northeast grid operator PJM could fast-track natural gas plants

HARRISBURG, Pa. (AP) — The Federal Energy Regulatory Commission has approved a proposal from the operator of the congested mid-Atlantic power grid to head off the potential for power shortages but that critics say will effectively fast-track the construction of new natural gas plants.

The commission's Tuesday night decision, in a 3-1 vote, said the proposal by PJM Interconnection is "just and reasonable and not unduly discriminatory or preferential." The proposal was originally submitted in December.

PJM, based in Pennsylvania, has said it made the proposal because a power shortage could affect the grid as early as 2026 as demand grows for electricity at the same time coal-fired plants and aging nuclear plants are retiring.

PJM's criteria for an eligible project includes ones that are ready to build, can provide a relatively high power capacity and are likelier to produce electricity when the grid is most likely to see power shortfalls. It said it would open an application period for proposals and select 50 to study.

Clean energy advocates say the process favors gas-fired plants, and they blame PJM for creating the existing reliability problem by taking an unduly long time to study proposed wind and solar energy projects in its project queue.

Proposals awaiting PJM's approval are more than 97% solar, wind or battery storage, according to federal figures. Less than 3% are natural gas.

Some critics questioned PJM's process. The Ohio Consumers' Counsel Office said it will be impossible for consumers to know whether PJM is selecting the most efficient or cost-effective power plants.

Demand for electricity has spiked for the first time in decades, as tech companies competing in the artificial intelligence race pursue new power supplies for energy-hungry data centers.

On top of that, cryptomining, the broader electrification of society and bipartisan political pressure to bring manufacturing back to the U.S. are fueling new electricity demand.

PJM coordinates the electric grid through Delaware, eastern Kentucky, Maryland, New Jersey, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia and Washington, D.C., as well as small portions of Illinois, Indiana, Michigan and North Carolina.

State leaders call for action

In mid-January, Maryland Gov. Wes Moore and Pennsylvania Gov. Josh Shapiro called on PJM to take action to prevent increases in energy costs. 

Gov. Moore asked the grid operator to adjust its capacity rules and shared concerns about the rising costs for business owners and residents across the state. 

The governor said the company uses a capacity market to ensure enough electricity is available to rising demands. The 2025-26 auction had record-high prices driven by a lack of new generation, according to Gov. Moore. 

Gov. Shapiro filed a complaint against PJM which cited flaws in the design of the auction that could bring significant price increases. He requested a temporary modification to the auction price cap until new generation can be added to the grid. 

Following the complaints, PJM said company leaders accepted an invitation to discuss the complaint and find a resolution. The company shared the following statement: 

"Gov. Moore joined with PA Governor Shapiro in sending a letter.  PJM is always willing to speak with its stakeholders, and so PJM has accepted the invitation to discuss the Complaint and a resolution. 

In the complaint, the Governor has asked for a different price cap formula to be applied and so that concept has been part of our discussions, along with the possibility of a price floor.

We have been clear that a cap and a floor have to be workable to ensure reliability, incentivize new build and preserve investor confidence in the market; the Administration agrees that these are important considerations along with the concerns around consumer costs that they've cited in their complaint – a concern that PJM also shares.

We want to make sure that our Members and other stakeholders are aware of these developments and discussions. We would expect to have additional conversations with the members."

The company also shared a statement in response to Gov. Shapiro's complaint. Read the full statement HERE.

CBS News Baltimore contributed to this Associated Press report.