Groceries, rent, gas, childcare. Everything costs more these days, leaving many families struggling to pay their bills every month.
The surging price of generated electricity is adding to this tremendous financial burden. As Duquesne Light Company is responsible for seeking the lowest-priced power for our more than 600,000 customers in Allegheny and Beaver counties, we feel their frustration and are actively seeking relief for them.
In a recent proposal to federal regulators, we pitched a plan that would save DLC residential customers $10 a month — and $7 billion annually for consumers across a 13-state region, including Pennsylvania. Unfortunately, regulators did not act on it.
In our state, utilities like DLC are responsible for maintaining the electric grid and moving energy safely and reliably to homes and businesses. We’re prohibited from generating that energy, and we also can’t profit from our purchasing efforts. Our job is to seek the lowest available price by competitively shopping for electricity on behalf of our customers.
The soaring cost of generation
Today, generation costs make up roughly half of our customers’ total electricity bill. In fact, customers are now paying an additional $20 a month for generation compared to just two years ago. Across the territory operated by PJM Interconnection — the regional transmission organization that manages the electric grid and wholesale electricity market for 13 states — the additional annual cost over the same timeframe tops $14 billion.
These record increases are driven by a supply-and-demand imbalance that’s forecasted to worsen over the next five years. There simply hasn’t been enough investment or urgency in building new power plants to replace aging and retiring facilities. There have also been challenges with keeping up with actual and forecasted demand, which is rising in large part due to data centers. As with any market, when there isn’t enough of something, the price goes up.
As a stopgap measure led by Gov. Josh Shapiro, PJM instituted a temporary price collar in 2025 that established a “cap” and a “floor” on capacity prices, limiting how much and how little a power plant is paid to remain available to generate electricity. PJM also sets a market price paid to the power plants for the electricity that’s actually produced.
This intervention kept electric prices from going even higher, but we need to do more.
A fairer price collar
On April 28, the Federal Energy Regulatory Commission approved a two-year extension to the price collar — a meaningful step for which DLC formally advocated through comments filed directly with FERC. We commend Gov. Shapiro and PJM for their commitment to reforms that shield families from the worst of these rising costs, but we see the decision to maintain the collar’s price cap of $325 per megawatt-day as a missed opportunity to go even further.
The top of the price collar, or cap, is intended to incentivize new power plant construction. The logic is sound: Signal growing demand via rapidly increasing prices, and power producers should increase supply by building the generation we need.
The problem is that the cap can’t compensate for the risks in today’s uncertain market dynamics, which include labor costs and supply chain availability; three-year price signals for plants that take five years to build; environmental regulations; siting and permitting challenges; and interconnection timetables.
As a result, not enough is being built in a timely manner. This is evidenced by PJM’s last two auctions, which resulted in less than two gigawatts of new generation capacity being added across its entire footprint. That’s less than 7% of the forecasted additional generation needed by 2030.
While the cap kept already-record prices in check, it still created an unnecessary windfall for owners of existing power plants. Our customers increasingly pay more for existing megawatts, yet little to nothing is built.
Lower cap, lower bills
DLC advocated for an even lower price, but FERC’s extension did not include that adjustment. The current floor price of $175 per megawatt-day was carefully set. By PJM’s own calculations, this price would continue to send the necessary signal to keep existing generation operating profitably without customers overpaying. That’s why DLC recommended that $175 per megawatt-day become the new cap.
This adjustment would have saved our customers $10 a month, and across Pennsylvania, consumers would have saved $1.5 billion a year. Across PJM’s territory, savings would have totaled $7 billion annually. That’s more money in the pockets of families, small businesses and communities.
We will continue to aggressively fight for customer relief. The long-term challenges facing the grid require quicker and deeper reforms, and DLC remains committed to that work in partnership with state regulators, legislators and Governor Shapiro’s administration.
Most importantly, we must begin the long, complicated and politically fraught work of incentivizing new power plant construction — before higher prices and lower availability get the best of us all.
Kevin Walker is president and CEO of Duquesne Light Co.