Glen Thomas: Pennsylvania’s energy success story is worth protecting, not reversing
By any honest measure, Pennsylvania’s competitive electricity market has been an overwhelming success. For more than two decades, it has delivered lower consumer costs, encouraged innovation, reduced emissions and attracted billions in private investment. That’s why recent (old) arguments suggesting the state should retreat from competition and reintroduce monopoly utility-owned, rate-based power generation deserve a closer look.
Since competition began, Pennsylvanians have benefited from some of the lowest wholesale electricity prices in the nation. In fact, utility default generation rates in Pennsylvania were lower for most of the past decade than at any point in the prior 30 years (inflation-adjusted). That’s not an accident — it’s the direct result of a market structure that rewards efficiency, innovation, and disciplined investment.
Competitive markets shifted the financial risk from consumers to investors. Developers build power plants because they believe they can compete and succeed, not because they are guaranteed cost recovery paid for by captive ratepayers. If they’re wrong, they absorb the loss and not Pennsylvania families and businesses.
Proposals to expand utility ownership of power generation would turn that model on its head.
Allowing utilities to own both generation and distribution would effectively re-create a monopoly structure where the same entity controls the wires delivering electricity and the power plants producing it. History shows exactly how that plays out: reduced competition, fewer incentives to control costs, and guaranteed utility profit returns through rate-based spending.
In this outdated model, utilities don’t need to compete to earn returns. They simply build projects and pass the costs plus a regulated profit margin on to captive ratepayers. That’s not a theoretical concern; it’s the fundamental design of rate-based regulation.
If the goal is to bring more power online, the solution is to strengthen competition, not abandon it.
Competitive markets remain the most effective mechanism for attracting new power generation. They send clear price signals that tell developers when and where new resources are needed. Since the July 2024 capacity auction, more than 12,000 MW of new generation projects have been announced in the PJM region, with over 9,600 MW in Pennsylvania alone. When these market signals are allowed to work, capital flows and projects get built.
Efforts at PJM to streamline interconnection, improve long-term planning, and create more efficient pathways for new resources to serve data center load are already underway. At the same time, accurate load forecasting is critical to ensuring these reforms succeed by helping maintain reliability, avoid over- or underbuilding, and protect consumers from unnecessary costs, as reinforced by Pennsylvania’s recent Load Forecast Accountability Act.
These are the kinds of reforms that will unlock investment and accelerate the addition of new supply without exposing consumers to unnecessary financial risk.
It’s also worth recognizing what’s at stake beyond price alone.
Pennsylvania’s competitive market has made it a national leader in energy production. The state has attracted a diverse mix of generation resources, from natural gas to renewables, because developers have confidence in a transparent and stable market structure. Notably, Pennsylvania generates roughly 40 percent more electricity than it consumes, underscoring its critical role as a net exporter of power. Pennsylvania’s prodigious generation surplus is entirely attributable to its competitive market structure and should be celebrated, not undermined.
Pennsylvania has already proven that competition works. The challenge now is to build its success by removing barriers to new development, improving market processes, and ensuring that the system can respond to growing demand.
The path forward is clear: more competition, not less.
Glen Thomas is president of PJM Power Providers Group (P3 Group), a non-profit organization made up of power providers with the mission of promoting competitive wholesale electricity markets in the thirteen-state region and the District of Columbia served by PJM Interconnection.
