rewrite this title As Energy Costs Surge, Eastern Governors Blame a Grid Manager

For decades, a little-known nonprofit organization has played a central role in keeping the lights on for 65 million people in the Eastern United States.

Even some governors and lawmakers acknowledge that they were not fully aware of how much influence the organization, PJM, has on the cost and reliability of energy in 13 states. The electrical grid it manages is the largest in the United States.

But now some elected leaders have concluded that decisions made by PJM are one of the main reasons utility bills have soared in recent years. They said the organization had been slow to add new solar, wind and battery projects that could help lower the cost of electricity. And they say the grid manager is paying existing power plants too much to supply electricity to their states.

Some governors have been so incensed that they have sued PJM, drafted or signed laws to force changes at the organization, or threatened to pull their states out of the regional electric grid.

The Democratic governors of Delaware, Maryland, New Jersey and Pennsylvania sharply criticized the organization in recent interviews with The New York Times and in written statements. And the Republican governor of Virginia, Glenn Youngkin, called on the organization to fire its chief executive in a letter obtained by The Times.

“PJM has lost the plot,” Gov. Philip D. Murphy of New Jersey said in an interview. In another interview, Gov. Wes Moore of Maryland said about PJM, “I am angry.”

The elected leaders — some of whom may run for president in 2028 — and their aides said PJM’s executives, board members and committees made many important decisions in secret. And too many decisions, like whether to make it easier or harder for new power projects to join the grid, effectively benefit established energy companies at the expense of residents and businesses that use electricity.

The governors’ fury at PJM is part of broader frustrations expressed by elected officials, residents and businesses over U.S. grids. After decades of modest and gradual rate increases, the price of power has climbed relentlessly over the last several years.

The cost of electricity for residents of Delaware, Maryland, New Jersey, Pennsylvania and Virginia has increased from 23 to 40 percent over the last five years.

Energy costs rose sharply after natural gas prices spiked when Russia invaded Ukraine in 2022. But electricity rates continued to climb after that shock because energy demand is growing rapidly, driven largely by new data centers.

In addition, power outages have become more frequent because utility equipment had been poorly maintained and was not upgraded for more intense natural disasters linked to climate change.

A spokesman for PJM said the organization was sensitive to the concerns of the governors but noted that it was regulated by a federal agency.

“The opinions of our governors are very important to PJM, and we share their concern about increasing electricity prices — a phenomenon occurring across much of our country,” said the spokesman, Jeffrey P. Shields. “PJM has no profit motive, no shareholders and no share price. We are fully regulated by the Federal Energy Regulatory Commission and cannot make any major changes without that body’s approval.”

When it was formed in 1927, the organization was meant to connect the operations of three utilities in Pennsylvania and New Jersey. Utilities in Maryland were later added, forming the Pennsylvania-New Jersey-Maryland Interconnection, or PJM. Working together allowed the utilities to share resources, cutting costs.

The organization’s main job is to oversee the flow of energy over transmission lines that carry electricity from power plants to cities and towns. PJM also devises and enforces policies about when and which types of power plants are added to the grid.

Over nearly 100 years, the PJM grid has grown to encompass all or parts of 13 states and the District of Columbia, stretching roughly from Chicago to Virginia Beach.

PJM has a nine-member board of managers, all of whom have worked in the energy industry or in other senior corporate jobs. It also has more than 1,000 voting members, most of which are utilities, power plant companies, transmission line owners and energy traders.

Most of those voting members have a direct financial stake in the organization’s decisions. Members typically vote on policies and issues. Some of the member votes are public, but others, including at smaller committee meetings where preliminary decisions are made, are not.

PJM is one of seven large U.S. grid operators. Each functions differently. Some are confined to single states like California and Texas, and their boards answer to state officials. California is considering expanding the authority of its grid manager to include other Western states under a PJM-style model.

Other grid managers function like PJM, as independent organizations that pick their own board members and chief executives with no input from governors.

“What the problem is at PJM is that it is controlled and influenced by the corporate energy companies that constitute its membership,” said Tyson Slocum, director of the energy program at Public Citizen, a nonprofit research and consumer group started by Ralph Nader. “It puts energy company lobbyists in the driver’s seat at PJM.”

Mr. Slocum added that the federal regulator that oversees PJM and other grid managers was too reactive to adequately police these organizations.

The Federal Energy Regulatory Commission has long pushed PJM to reform and speed up approval of new sources of electricity like wind, solar and battery projects. But progress has been slow. Critics blame PJM for that, but the organization says permitting delays, financing challenges, government decisions and other factors are more to blame.

A spokeswoman for the federal agency said it could not comment because of pending regulatory matters.

But at a meeting last week, the agency’s chairman, Mark Christie, said reforms at PJM and other regional grids were overdue.

“For years I’ve been saying we are heading toward a reliability crisis,” Mr. Christie said. “The crisis is really now on our doorstep.”

A 2024 report by Columbia University’s School of International and Public Affairs concluded that PJM “has experienced the most severe delays and backlog in new generation — projects entering the queue today have little chance of coming online before 2030.”

The time it takes to add new sources of electricity is critical because demand for energy is growing rapidly. PJM’s territory includes northern Virginia, which has the country’s largest collection of data centers. Technology companies want to add many data centers in other PJM states, particularly Ohio and Pennsylvania.

Mr. Shields said PJM had reduced the backlog of power projects waiting to join its grid, recently approving new capacity that can serve 40 million homes.

In response to criticism of secrecy, he said that PJM holds more than 400 stakeholder meetings each year and that the vast majority are open to the public. And the organization makes documents available to the public on its website.

But many state officials said PJM existed mainly to benefit the utility industry.

Over the last three years as electricity rates rose sharply in Maryland, a state lawmaker, Lorig Charkoudian, a Democrat, pushed for legislation that would force utilities in her state to disclose their votes at PJM. Mr. Moore signed the bill into law last month.

Ms. Charkoudian said a handful of PJM states had drafted or were working on similar legislation.

In interviews, Governor Murphy of New Jersey and Gov. Matt Meyer of Delaware — both Democrats — said they supported the legislation and were working on other efforts to reform PJM.

Other states have gone even further.

In December, Gov. Josh Shapiro of Pennsylvania sued PJM after the grid manager conducted an annual auction in which power plant owners submit the price they are offering to supply energy when demand surges, which often happens in summer. The prices set by the auction would have resulted in big price increases for electricity users. The highest bid in the auction contributes to the final price PJM sets for all generators, meaning even power plant owners willing to accept less money would be paid the higher prices.

The state and PJM reached a settlement that caps the price set by the auction. Mr. Shapiro said the deal would save Pennsylvanians $21 billion over two years.

“I do not think PJM is serving the good people of Pennsylvania well,” Mr. Shapiro said in email responses to questions. “We’ve got to re-examine whether or not Pennsylvania should be a member of PJM. We are a net energy exporter, meaning we create more energy than we actually need. That puts us in a strong position to both keep consumer prices low and also create markets in other states.”

Mr. Shields said the complaint had been supported by five of the six states affected by it. He said the settlement maintained the effectiveness of the existing market design while supporting reliability and affordability of the grid for consumers.

But the settlement angered at least one other governor.

In a February letter to the chairman of PJM’s board, Governor Youngkin of Virginia criticized PJM for not consulting other states before settling with Pennsylvania. He said the deal was part of the grid manager’s piecemeal approach to running its system that was driving up electricity costs. Mr. Youngkin also said the organization should fire its chief executive.

“Instead of seeking to resolve these fundamental issues through open and transparent dialogue with all states, including Virginia, as well as other stakeholders, PJM leadership negotiated a one-off deal with a single state that impacts rates for all PJM customers,” Mr. Youngkin wrote.

Mr. Shields said Mr. Youngkin withdrew the letter without formally submitting it to the full organization “at PJM’s request.”

Last month, PJM announced that its chief executive, Manu Asthana, would step down by year’s end. The organization said the decision had preceded Mr. Youngkin’s letter.

“We’re spending our time talking about the wrong things,” Mr. Asthana said in a statement. “Prices are up because of tightening supply and demand driven by generator retirements and data center growth, and it’s impacting consumers. We need to be working together on additional ways to bring supply onto the system rapidly.”