Electricity bills are rising fast and eroding household budgets for millions of the public. The median household in the bottom fifth of earners spends nearly 10% of its income on energy, while the top fifth spends around 1%. In 2024, 43% of adults in households earning under $25,000 reported being unable to pay an energy bill in the prior year. Last week, the largest electricity market in the country signaled that this squeeze is about to get worse, and federal permitting delays are exacerbating the problem.
On July 14, PJM Interconnection’s capacity market auction for the 2028 to 2029 delivery year cleared at the highest price legally allowed, $325 per megawatt-day, but there is still an expected shortfall in capacity of 6,831 megawatts. This is the second year in a row that the auction left PJM with a capacity shortfall relative to its desired one-event-in-10-year reliability standard. The auction is designed to mitigate the risk of rolling blackouts, when PJM’s 67 million customers need power most, by paying producers for their capacity and encouraging investment in reliable generation. The latest capacity auction will increase PJM ratepayers’ bills by as much as 5%. According to Patrick Cicero, Pennsylvania’s former Consumer Advocate, capacity payments from prior auctions have already cost the average Pennsylvania household “somewhere in the neighborhood of $220 to $320 per year.”
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To try to maintain reliability during this summer’s heat waves, the Department of Energy has been issuing emergency orders that direct PJM to keep otherwise unavailable generating resources online. Both the auction and the emergency orders point to the same conclusion: the United States is not adding reliable generation and transmission quickly enough to keep up with rising demand.
Demand will continue to rise. These rising prices are a signal from the market that significant investment in energy infrastructure is essential. For 15 years, U.S. electricity demand was essentially flat. The North American Electric Reliability Corporation now expects peak demand to rise by 24% over the next 10 years. More electricity generation and transmission are necessary not only to power data centers but to provide the power for growing domestic manufacturing and a shift to electric vehicles and heat pumps. Yet projects that investors are willing to finance spend years waiting for permits, interconnection, or litigation before they can add supply. If supply cannot match demand, prices will rise and people will miss out on new economic opportunities.
Investors are prepared to pour trillions of dollars into American energy infrastructure over the coming decade, if the federal permitting process enables them to. Investor-owned electric companies alone plan to invest $1.4 trillion by 2030. The biggest barrier to building this infrastructure is not capital or technology but regulation and permitting. Energy infrastructure projects can clear environmental review and then spend a median of three years in litigation after receiving the relevant federal approvals, according to the Breakthrough Institute. At an 8% interest rate, a three-year delay adds roughly 26% to a project’s financing costs. Ultimately, these delays will result in billions of dollars in additional financing costs being passed onto households in the form of higher electricity rates. Delays and uncertainty either kill projects outright or result in energy infrastructure being built behind schedule and over budget.
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Sens. Tom Cotton (R-AK) and Catherine Cortez Masto (D-NV) have introduced a bipartisan bill that would resolve the biggest federal obstacles to building new energy infrastructure. The FREEDOM Act would create binding deadlines for agencies and give developers expedited judicial review to reduce project risk, while preserving the underlying environmental statutes. It would also prevent agencies from halting or revoking already-permitted projects, as the Trump administration did when it paused offshore wind leases for projects under construction and as the Biden administration did when it terminated the previously approved Ambler Road right-of-way. Successive administrations of both parties have used this weapon, and Congress should take it away from them. Protecting fully permitted projects would depoliticize critical energy infrastructure and save ratepayers billions of dollars.
Protecting ratepayers requires meaningful permitting reform. Other regional grid operators face the same demand growth that just produced PJM’s shortfall. If developers cannot build new transmission lines, power plants, and reactors on time and on budget, lower-income people will see their household budgets eroded by higher energy prices. Lawmakers who talk about affordability but are not demanding permitting reform are asking those households to keep paying for Washington’s delay.
Grant Dever is a visiting fellow at the Foundation for Research on Equal Opportunity.
