Duquesne Light asks feds to lower costs customers pay to power plants
Customers would save an estimated $10 per month, according to the company.
By JACK TROY
TribLive
Duquesne Light is making the case that power plants are paid too much for the promise of providing electricity, a cost set through auctions run by grid operator PJM Interconnection — and shouldered entirely by consumers.
PJM’s process allows power plants to bid on contracts to supply electricity if called upon. It’s effectively a fee for reserving capacity that’s separate from the cost of power.
The organization covers Pennsylvania and 12 others states, plus Washington, D.C., coordinating with generators and utilities to make sure there’s enough electricity to go around.
Power producers most recently fetched about $325 per megawatt per day, a cap set through an agreement between PJM and Gov. Josh Shapiro after auction prices spiked to $270 per megawatt per day from $29 per megawatt per day at a 2024 auction.
Auctions set the price PJM pays power generators, which in turn is passed on to utilities and then to consumers.
The ceiling was intended to contain consumer costs while still being lucrative enough to incentivize companies to build or expand power plants and meet the soaring demand for electricity.
The money has been enough to keep plants from shutting down, but new generation to support the grid has hardly materialized. Most ongoing projects, like the conversion of the Homer City power plant from coal to natural gas, will primarily feed power directly to data centers.
“Our customers have spent all this additional money… and there’s very little to show for it,” Duquesne Light Vice President of Energy Policy David Fisfis told TribLive on Monday. “It’s just a windfall for the power plant owners.”
$10 per month savings
Lowering the limit to $175 per megawatt per day will be enough to motivate existing generators to stay online while reducing electric bills, in Fisfis’ view. This figure is the current price floor, which PJM previously said will be enough for power plants to keep operating.
Under Duquesne Light’s proposal, its customers would save about $10 a month. Capacity costs appear on bills under the generation section, which utilities don’t make any money on (their profits lie in distribution).
With Fisfis’ signature, Duquesne Light submitted a letter last month to the Federal Energy Regulatory Commission proposing the $175 per megawatt per day limit as the agency decides whether PJM can extend the existing cap for another two years.
Duquesne Light serves much of Allegheny and Beaver counties. FirstEnergy, which covers the remainder of Southwestern Pennsylvania under its subsidiaries West Penn Power and Penn Power, penned a similar, if less pointed letter last month to the agency.
“This commission’s greatest ability to address affordability of PJM customer bills in the near term is by moderating the price that consumers pay to keep the existing fleet open,” FirstEnergy said in its letter without offering a specific cap.
PJM is seeking a decision from the Federal Energy Regulatory Commission on extending the existing cap by April 28 as it prepares for its June 30 auction. That auction will set capacity costs between June 2028 and May 2029.
2-auction system
Auctions are held between one and three years in advance to give power producers time to add new capacity.
The 2024 auction that kicked off capacity cost controversy and led to the cap settlement applies through May. Capacity costs that kick in the following month came right up against the $325 per megawatt per day limit, meaning bills are set to rise even further.
Duquesne Light says three years or less is too short a window for these companies to secure financing, permits and equipment and carry out construction, partly explaining why high auction prices have resulted in only a marginal rise in generation capacity.
