The latest PJM capacity auction cleared at the regulatory cap for the third consecutive auction, reaching more than eleven times the price from four years ago and falling short of reliability targets. In an opinion piece for Utility Dive, Atlantic Council experts Stephen Greene and Frank Willey argue that this is a symptom of a design problem, not a verdict on competition. They note that while such results point to underinvestment, abolishing competitive wholesale markets in favor of vertically integrated utilities would discard decades of innovation and efficiency gains.
The authors trace the crisis to market implementation: restructured markets leaned heavily on spot prices instead of long-term contracts. In many states, default retail service was designed with attractive rates and spot-market purchasing, and retail competition never developed as robustly as expected. With low demand growth for years, the risks of that approach stayed hidden. But as demand growth accelerates, the absence of stable, long-term revenue signals has exposed generators and consumers to volatile prices and discouraged needed investment.
Rather than returning to regulated monopoly, the experts suggest using long-term power purchase agreements between generators and load-serving entities, potentially driven by regulator-imposed hedging requirements. PJM's own white paper also offers the option of bilateral agreements between independent power producers and RTOs, funded through a reliability charge. Such contracts, they argue, would give generators predictable revenue and protect consumers from price spikes—while allowing spot markets to handle real-time adjustments. The source contains no alternative view, as it is a single opinion piece. The article does not claim these proposals are imminent, only that they should be pursued by states, FERC, and regional transmission organizations.