Exelon Commends FERC Order Extending PJM Price Collar to Support Customer Savings and Grid Reliability
Exelon has welcomed a significant regulatory decision issued on April 28 by the Federal Energy Regulatory Commission (FERC), which extends the current capacity price collar in the PJM Interconnection market. The move represents a crucial step in addressing mounting concerns around energy affordability, reliability, and supply constraints across one of the largest regional electricity markets in the United States.
The newly approved order ensures that the existing price collar mechanism—designed to limit extreme fluctuations in capacity market prices—will remain in place for an extended delivery period spanning June 2028 through May 2030. According to Exelon, this extension is expected to generate substantial financial relief for customers across the PJM region, potentially saving tens of billions of dollars during the covered timeframe.
A Strategic Win for Energy Affordability
The extension of the PJM capacity price collar aligns closely with Exelon’s broader policy and customer-focused initiative known as the “Exelon Promise.” Launched as a comprehensive strategy to address rising energy costs, the initiative emphasizes practical and immediate solutions that balance affordability with long-term grid reliability.
Electricity customers in the PJM region—which includes parts of the Mid-Atlantic, Midwest, and South—have faced increasing energy bills in recent years. These cost pressures are driven by a combination of factors, including growing electricity demand, delays in bringing new generation resources online, and evolving market dynamics influenced by the energy transition.
By capping the range within which capacity prices can fluctuate, the price collar serves as a protective measure for consumers. It prevents sharp spikes in costs that could otherwise result from supply-demand imbalances in the capacity market, particularly during periods of constrained generation availability.
Exelon has been a vocal advocate for extending this mechanism, arguing that it provides a necessary buffer for customers while the region works through structural challenges in its energy supply pipeline.
Addressing Supply-Demand Imbalances
One of the central concerns highlighted by Exelon is the growing gap between electricity demand and available supply in the PJM region. PJM has projected that electricity demand could increase by more than 30 gigawatts by 2030, driven by factors such as electrification, economic growth, and the rapid expansion of energy-intensive sectors like data centers.
However, the pace at which new generation resources—particularly reliable, dispatchable capacity—are being developed has not kept up with this anticipated demand growth. Project delays, regulatory hurdles, and market uncertainties have contributed to a slower-than-expected rollout of new supply.
This imbalance creates upward pressure on capacity prices, as existing resources become more valuable in ensuring grid reliability. Without mechanisms like the price collar, these pressures could translate into significantly higher costs for consumers.
Colette Honorable, Executive Vice President, Chief Legal Officer, Compliance and Corporate Secretary at Exelon, underscored this concern in her remarks on the FERC order. She noted that while demand is expected to surge, the lack of timely new supply presents a real challenge for maintaining both reliability and affordability.
The Role of the Price Collar
The PJM capacity market plays a critical role in ensuring that sufficient electricity generation resources are available to meet future demand. Through competitive auctions, the market secures commitments from power producers to supply electricity during peak periods, thereby maintaining grid stability.
The price collar mechanism sets both a floor and a ceiling for capacity prices within these auctions. This structure helps stabilize the market by preventing prices from falling too low—potentially discouraging investment in new resources—or rising too high, which would impose undue financial burdens on customers.
By extending the price collar through 2030, FERC has effectively maintained a balanced approach that supports both investment signals for developers and cost protections for consumers.
Exelon believes this balance is critical during a transitional period for the energy sector, where traditional generation sources are being phased out in some areas while new technologies and infrastructure are still scaling up.
The Exelon Promise: A Multifaceted Approach
The company’s support for the price collar extension is part of a broader suite of actions under the Exelon Promise initiative. This comprehensive program is designed to tackle the root causes of rising energy costs while ensuring long-term sustainability and reliability of the power system.
One key component of the initiative is a $60 million Customer Relief Fund, aimed at providing direct financial assistance to customers struggling with high energy bills. This fund complements other efforts to ease the immediate burden on households and businesses.
In addition, Exelon continues to invest in energy efficiency programs that help customers reduce their overall consumption. These programs not only lower bills but also contribute to broader system efficiency by reducing peak demand.
The company is also exploring innovative agreements with large energy users, such as data center operators. By structuring these agreements in ways that protect smaller customers, Exelon aims to ensure that the cost of serving large, energy-intensive loads does not disproportionately impact other ratepayers.
Finally, Exelon has been actively advocating for policy reforms that support utility-generated power and other measures to enhance supply availability. These reforms are intended to address systemic issues in the energy market that contribute to cost volatility and supply constraints.
Collaboration for Long-Term Solutions
While the extension of the price collar provides immediate relief, Exelon acknowledges that it is not a permanent solution. The company emphasizes the importance of continued collaboration among stakeholders—including regulators, utilities, developers, and policymakers—to address the underlying challenges facing the PJM market.
Key areas of focus include accelerating the development of new generation resources, modernizing grid infrastructure, and streamlining regulatory processes to reduce project delays. These efforts are essential to ensuring that the region can meet future demand without compromising affordability or reliability.
Exelon also highlights the need for a diverse energy mix that includes a combination of traditional and emerging technologies. This “all-of-the-above” approach is central to the Exelon Promise and reflects the company’s commitment to balancing environmental goals with practical considerations around cost and reliability.
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