The Grid Is Warning Pennsylvania

Authored by William desRosiers via American Greatness,

If anyone still doubts how serious the power situation unraveling in Pennsylvania has become, the warning signs are no longer abstract. PJM Interconnection, the regional transmission organization that coordinates wholesale electricity across all or parts of 13 states, including Pennsylvania, and the District of Columbia, made the problem unmistakably clear in its most recent capacity auction.

According to PJM’s own executive summary, the auction ended more than 6,623 megawatts (MW) below what PJM says it needed to keep the lights on safely, leaving far less backup power than recommended. To put that into perspective, that’s the amount needed to keep the lights on for roughly 6.6 million homes. Even more concerning, PJM noted only 774 megawatts of new generation cleared the auction, an extremely small amount relative to accelerating demand. Lastly, capacity prices hit the price cap, a clear signal of scarcity rather than healthy supply.

Under PJM’s own tariff, a shortfall of this magnitude triggers a formal investigation. Continued shortfalls could lead to a Reliability Backstop Auction, an emergency procurement mechanism that often results in higher costs with little immediate new infrastructure to show for it.

To be fair, PJM is set to release a revised load forecast this month, and the shortfall may narrow. Even if it does, that is not something to celebrate. The underlying problem remains unchanged: new power is not getting built fast enough.

Unsurprisingly, this has sparked a growing debate over who is to blame.

Some point squarely at PJM and its interconnection backlog. Others argue that Pennsylvania’s long-standing reputation as a difficult place to build, driven by permitting complexity, regulatory uncertainty, and tax policy, is equally responsible. At the same time, restrictive policies in states such as Maryland and New Jersey have weakened baseload power and deterred new generation, exporting reliability risk across the PJM footprint. Taken together, these dynamics have produced a regional market where new investment increasingly flows toward states offering clearer rules, faster timelines, and greater certainty.

Need more proof? Under PJM’s most recent Reliability Resource Initiative (RRI), Pennsylvania accounted for just 342 megawatts of proposed new or expanded natural-gas capacity. By comparison, Ohio accounted for 3,363 megawatts, Virginia for 3,320 megawatts, and Kentucky for 786 megawatts. Pennsylvania barely edged out New Jersey in this category, a state that has signaled little appetite for new natural-gas generation.

This lack of clear direction even has electric utilities, largely removed from power generation since Pennsylvania restructured and deregulated its electricity markets more than two decades ago, lobbying to re-enter generation in the name of reliability.

So, what can Pennsylvania learn from Texas?

Texas faced a similar looming power crunch and chose a different path. Over the past year, it committed nearly $1 billion through a generation loan and completion bonus program to accelerate dispatchable power. Multiple natural gas plants, some exceeding 1,000 megawatts, are already capitalizing on this. Texas reduced risk, shortened timelines, and sent a clear signal that reliability matters and the state is willing to act.

Before ending deregulation, let’s try to make targeted adjustments that support private investment.

Take state Sen. Gene Yaw’s proposal, SB 1106, for example.

This legislation would update Pennsylvania’s Local Resource Manufacturing (EDGE) Tax Credit to include baseload power generation that interconnects with the regional transmission system and contributes to grid reliability. Crucially, it doesn’t overhaul the current market to put the state in the business of picking winners and losers. Private companies would still decide what to build based on market demand.

SB 1106 is not a silver bullet. It is not as generous or sweeping as Texas’s program. But it is practical. It builds on an existing incentive rather than inventing a new one, reflecting a reality long understood in Harrisburg.

Pennsylvania’s track record supports this approach. The Commonwealth has successfully deployed tax credit programs for decades. The Neighborhood Assistance Program (NAP) and Education Improvement Tax Credit (EITC) have driven hundreds of millions of dollars in private investment into communities, workforce development, and education. The ethane tax credit helped land Shell’s petrochemical cracker plant in western Pennsylvania, one of the largest private investments in state history. These programs work because they align public goals with private capital.

It is also important to clarify what tax credits are and are not. They are not grants. They require upfront investment, strict compliance, and performance. In the case of power generation, that means the plant must be online, interconnected, and consuming Pennsylvania natural gas.

That resource advantage matters. Pennsylvania sits atop one of the world’s largest natural gas supplies. The fuel is here. The workforce is here. The opportunity to site multiple new power plants is real if policy stops getting in the way.

To the Commonwealth’s credit, policymakers did get something right this year. By ending Pennsylvania’s participation in the Regional Greenhouse Gas Initiative (RGGI) through the budget process, lawmakers sent a clear signal that affordability and grid reliability are priorities. That decision matters. Senate Bill 1106 is the logical next step to ensure Pennsylvania can attract a new generation and strengthen its energy position.