PJM’s Broken Markets Are Burning Ohio Ratepayers

By Donald Larson, eGeneration Foundation Executive Director

In what many are calling a glaring indictment of deregulated energy markets, PJM Interconnection—the regional transmission organization responsible for managing the electric grid across 13 states including Ohio—has once again proven that it’s better at inflating costs than ensuring energy security.

In June 2024, PJM held its latest capacity auction, a supposedly market-driven mechanism meant to secure future electricity supply. The result? An unprecedented 800% increase in capacity prices, set to hit Ohio electric bills starting June 2025 through May 2026. For Ohio families, this translates to a painful 10–15% hike in their electricity bills, or about 2 cents more per kilowatt-hour (kWh)—a surge with no corresponding benefit in reliability or new generation.

What is “Capacity” Anyway?

“Capacity” is a surcharge included in your energy bill, representing the cost of having power plants ready to deliver electricity during peak demand times—think sweltering August afternoons or bitter January mornings. It’s not for energy you actually use, but for the potential to deliver it when needed.

Under PJM’s model, utilities and aggregators like NOPEC are required to participate in these capacity markets, but they have no control over the price. The rates are set behind closed doors, based on opaque forecasts and market manipulation masquerading as economics.

Manufactured Scarcity?

While PJM blames the price spike on “increased demand, more electronics, and extreme weather,” critics point out that no new generation capacity was actually added as a result of this auction. That raises the question: If we're paying more, what exactly are we paying for?

Even more damning is the fact that PJM’s rules incentivize incumbent generators, discourage innovation, and slow the adoption of advanced energy solutions like modular nuclear or waste-to-fuel plasma systems that could relieve grid stress and lower costs. Whereas in the past, PJM has gone to great lengths to create markets that favor renewable technologies, which solve no environmental or economic problems and address no threats to Ohioans.

Mismanagement Masquerading as Markets

The promise of deregulated electricity was supposed to be competition, innovation, and lower prices. Instead, Ohio ratepayers are now stuck with volatile prices and market failures dressed up as “capacity auctions.” A truly competitive market would reward efficiency and cost savings, rather than inflating consumer bills while locking out new, cleaner technologies.

If PJM can’t get capacity procurement right without gouging consumers, it may be time for Ohio lawmakers and regulators to consider whether the state’s energy future should be entrusted to very political bureaucrats in a regional monopoly shielded from voter accountability.

A Call to Action

Ohio’s economic resurgence depends on affordable, reliable power. Our manufacturers, data centers, and new nuclear innovators can’t thrive in a system where basic grid access is rigged to benefit the old guard. The legislature must take bold steps to reassert state control, empower the Ohio Nuclear Development Authority, and reform or replace PJM’s failed capacity construct.

The market isn’t broken. PJM is. And Ohio families shouldn’t pay the price for it any longer.