News Stories

On May 12, 2026, while speaking at PJM’s Annual Meeting in Baltimore, Maryland FERC Chairman Laura Swett ponders that “given PJM’s huge and diverse footprint, perhaps it simply has grown too big to function.”

As reflected in her press release  “we face historically unprecedented demand—with potentially historically unprecedented catastrophic failure.  PJM is the tip of the spear—the laboratory of national and economic security on which our country may rise or fall.”

“This is not a time for weak leadership or to be crippled by fear—this is a time for difficult, history-making decisions that are not for the faint of heart, decisions that may leave many unhappy, decisions that may make or break part of a nation.  We need NEW—not already planned or queued—generation and we need it NOW.  There’s no excuse for failure—companies are ready and willing to pay for more than their fair share of getting the power they require.”

“But whatever happens, we cannot disrupt finalized commercial agreements.  At FERC, I have no appetite to compromise investor confidence when those investors are driving the buildout of the generation that PJM desperately needs.  However you get there PJM, you need to figure it out.  Fast.”

“I don’t make these statements flippantly.  We all know that PJM faces incredible obstacles not shared by other markets.  It sits at the crossroads of 13 states and DC with fundamentally different regulatory structures, resource portfolios, and politics; is divided between states with vertically integrated utilities that own generation, transmission, and distribution assets and other states that have various levels of restructuring and retail competition that rely on competitive markets.”

Saying she has a “great appetite for aggression when the country’s future hangs in the balance,” Swett said FERC would hold a conference July 23 to identify flaws in PJM’s governance process and solutions for fixing them. “It will be a work session to build a record eyed toward actionable change,” Swett said.

PJM’s recent white paper  Powering Reliability Through Market Design is extraordinary in that it openly acknowledges that the foundational assumptions of organized capacity markets no longer fit the environment in which those markets operate.  The institutional underlying flaws are not new.  In fact, during early development and expansion of the capacity markets and interplay with resource adequacy many questioned the wisdom of relying upon an administrative supply-side mechanism to compensate for demand-side flexibility that was purposely prevented from developing.  Over the past couple of decades, increasingly elaborate administrative price cap mechanisms have been built to compensate for the absence of demand responsiveness.

PJM’s paper indirectly acknowledges the dilemma.  PJM’s paper recognizes that scarcity pricing during tight conditions is economically rational.  The paper also recognizes that those scarcity prices can create political backlash because large portions of load remain exposed to volatility without meaningful hedging arrangements.

Relaxing suppressive institutional constraints by more heavily relying upon retail rate reform and expanded demand participation gets more directly at the institutional root of the resource adequacy problem.