Electric bills in Baltimore have been especially high this summer after weeks of scorching temperatures.
But it’s not just the heat that’s driving up the cost.
Another factor, some elected officials and environmental and consumer groups argue, is regional grid operator PJM Interconnection’s failure to plan for the future. That has set utility customers up to pay more.
The star of this drama is the coal-fired Brandon Shores power plant that sits against the backdrop of the Inner Harbor. The 40-year-old plant was set to close in June 2025. Its fate, however, is in limbo as PJM argues it needs the plant to meet its obligation to provide reliable service.
Baltimore Gas and Electric Company bills have tripled in the last 14 years, increasing by 8.7% annually, according to a report from Maryland’s Office of People’s Counsel. If Brandon Shores is removed from the power grid’s capacity market, it will cost more to get energy into the BGE utility system.
“We’re looking at bill increases for the average customer in Maryland of up to $200 a year,” said David Lapp of the Office of People’s Counsel, a utility consumer advocacy office.
On the other hand, if PJM and owner Talen Energy win their bid to force Brandon Shores and the next-door Herbert A. Wagner power plant to stay open longer, it could potentially cost Marylanders $250 million or more for at least three years.
Meanwhile, PJM is pushing forward a $786 million transmission upgrade project to make up for the eventual loss of Brandon Shores. Ratepayers, ultimately, will foot the bill for that, too.
Sierra Club, an environmental advocacy group, and the Office of People’s Counsel have long voiced their concerns about PJM’s policies and decisions. Last week, U.S. Sens. Chris Van Hollen and Ben Cardin, along with Reps. John Sarbanes, Jamie Raskin and David Trone joined together to decry Marylanders’ increasingly expensive bills.
All point the finger at PJM, who they say should have seen the retirement of Brandon Shores coming and been better prepared to implement alternatives to address power grid reliability — that would be far less costly.
Price hikes incoming
While the fate of Brandon Shores is unknown, PJM recently announced a shocking new price for power supply resources for its BGE customers.
The capacity market auction for the area closed at $466.35 per megawatt day for June 2025 to May 2026, up from $73 for June 2024 to May 2025. That’s a 538% increase.
Its capacity prices were higher than those for Dominion Energy and the rest of the transmission area.
Utility customers will only see a fraction of this cost reflected in their monthly bills, but it’s coming sooner than later, with implementation starting on June 1.
“They show a huge hit that Maryland customers are going to take as a result of the interplay between these plant retirements and the capacity market,” Lapp said.
In the announcement of the new prices, PJM pointed to a decreased electricity supply due to generator retirements, increased electricity demand and implementation of market reforms as the reason for the price hikes. Dan Lockwood, a spokesperson for PJM, said data centers in the region and electric vehicles are also adding to increased energy demands.
“The significantly higher prices in this auction confirm our concerns that the supply and demand balance is tightening across” the region, said PJM President and CEO Manu Asthana.
Who’s to blame?
Talen Energy, the Houston-based company that owns Brandon Shores, announced in November 2020 that it planned to convert units at the power plant from coal to natural gas. After a reassessment of the economic impact of the conversion in 2023, the company abandoned that plan, citing costs as a major factor. Talen Energy had filed for bankruptcy the year prior.
The company decided to close the plant instead, along with the Herbert A. Wagner power plant, a neighboring 834-megawatt natural gas and oil-fueled generator. The company notified PJM in April 2023 that it would close Brandon Shores by June 2025.
That decision was a private agreement between Talen Energy and the Sierra Club, Lockwood said. “The bottom line is that it is difficult for PJM to proactively plan if it does not have all of the facts,” he said.
After an analysis, the closure alarmed PJM, who in response expressed concerns about grid reliability if the coal units were brought offline.
In April, Talen Energy asked the Federal Energy Regulatory Commission to approve a “reliability-must-run” agreement to keep the power plants operating past their planned retirement to avoid grid reliability problems.
Congressional leaders in their statement last week called PJM’s current path an “injustice” to ratepayers, the agreement “inefficient,” and called out PJM’s “outdated” processes for dealing with retiring power plants.
PJM is planning a response, Lockwood said, adding that he company “respects the positions and supports many of the concepts outlined by the Congressional delegation.”
PJM requires power plant owners to notify them of the retirement of a plant at least six months before a proposed deactivation date. Talen Energy gave two years’ notice, but critics argue even that isn’t enough time for PJM to implement less costly alternatives.
More than 20 groups and companies filed motions to intervene in the FERC proceedings after weeks of public comments.
Casey Roberts, a senior attorney with the Sierra Club, said the organization was concerned that PJM did not consider alternatives to the extension agreement and would still have to pay the agreed-upon amount to Talen Energy, even if it ended early.
“There are no performance incentives in the agreement whatsoever,” Roberts said. “If Talen Energy isn’t able to operate the coal plant when PJM says it’s needed for reliability, they face no penalty.”
GridLab, an energy consultancy agency, and Telos Energy, a grid analytics and engineering company, analyzed the impact of Brandon Shores’ retirement in January. Both affirmed PJM’s grid reliability concerns and proposed that the operator implement a 600-megawatt battery that could bring down overall costs.
Batteries of this size are expensive, however. In GridLab’s analysis, it could cost $452 million — more than one year of the reliability-must-run agreement. However, the organization noted that the battery could also generate revenue to help offset more than half of the cost.
In a May report, PJM rejected the idea, saying it was not a “viable or realistic option at present.” PJM said it was murky on how the battery idea would work, but that it is open to “feasible” alternatives.
“Brandon Shores marks the beginning of a wave of legacy coal and gas plant retirements, and technology is available today to approach these situations faster, smarter, and typically at a lower cost,” said Casey Baker, senior program manager at GridLab. “PJM should adopt processes for better outcomes for ratepayers and reliability in the future to avoid the same fate as the Brandon Shores case.”
Van Hollen said in an interview that the retirement of power plants is a national issue, but “PJM seems to be really falling behind when it comes to adopting some of these innovative measures.”
In the letter to PJM, Maryland senators and representatives pointed to three areas for reform: fast-track the transmission project; update internal rules to “unlock the full potential” of energy storage, including allowing for storage as a transmission asset; and be more proactive in foreseeing the future as generators are retired to meet the state’s clean energy goals.
In July, FERC approved the extension agreement but took issue with the proposed costs. The commission’s analysis found that the rate schedules for both plants “may be unjust, unreasonable, unduly discriminatory or preferential, or otherwise unlawful.”
Now FERC is encouraging all parties to settle, but Lapp said any resolution could take years.
Meanwhile, Talen Energy could continue to run Brandon Shores without a reliability-must-run agreement past June 2025; ratepayers would still foot the bill.
