When power markets reward scarcity, customers lose

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Maryland families don’t need an economics lesson to know something is wrong. They see it every month when they open their energy bills and ask the same questions: Why is this so expensive and why does it keep getting worse? The latest power auction run by PJM Interconnection offers a troubling answer. Unless policymakers act, customers will keep paying more for power without getting more reliable power in return. That is the opposite of affordability, and it’s a warning sign Maryland cannot ignore.

PJM is the regional grid operator that manages the electricity system for Maryland and 12 other states. It doesn’t own power plants or power lines. Instead, it runs markets, most notably a “capacity auction” meant to ensure there will be enough power supply available years in advance to keep the lights on. In theory, this system is supposed to protect customers by encouraging competition and keeping costs down, but the most recent auction exposed a broken market that prioritizes profits over customers

The auction results were stark. In short, customers are being asked to pay record-high prices even though the system failed to secure enough power supply. PJM came up about 6.6 gigawatts short of the power Maryland would need to comfortably meet future demand, yet prices still hit the maximum level allowed under the rules. That’s not a functioning market – it’s a warning flare.

Maryland customers are especially vulnerable because the state relies heavily on imported power. On non-peak days, roughly 40% of Maryland’s electricity comes from outside the state, rising to as much as 70% during periods of peak demand. When power supply is tight anywhere in the region, Maryland households, businesses, and vulnerable communities feel it first and hardest through higher bills. Our families and businesses suffer, and Maryland customers have little protection from price shocks they can’t control.

So why does this keep happening? As power supply is falling short, electricity demand continues to rise due to economic growth, electrification and the expansion of energy-intensive industries. Under PJM’s current rules, these tight power supply conditions don’t trigger rapid investment or customer relief. Instead, they can lead to outsized profits for private power plant owners, rewarding scarcity rather than reliability. Customers pay more, while the system delivers less.

Maryland has a clear opportunity to change this dynamic, but outdated laws are standing in the way. Today, public utilities – regulated entities with a legal obligation to serve customers – are largely prohibited from generating their own power. These utilities can plan long-term, finance projects at lower cost, and operate under public oversight focused on affordability and reliability. Yet the system forces Maryland to rely almost entirely on private generators whose primary obligation is to shareholders, not customers.

Some critics argue that allowing utilities to generate their own power would undermine competition. That argument ignores reality. The current market is not delivering affordable or reliable outcomes for customers. Expanding the ability of regulated utilities to build and own generation would increase competition, add badly needed power supply, reduce dependence on volatile auctions, and put downward pressure on prices. Most importantly, it would restore a measure of affordability and stability for customers who have seen too much of both slip away.

Energy is not a luxury. It is a basic necessity for families, schools, hospitals, and businesses. A system that consistently drives up costs while failing to ensure reliability is not just unsustainable, it’s bad market design and bad economic policy. Customers deserve better than a power market that works only when supplies are scarce and prices are high.

Maryland leaders need to be honest about what’s happening. The current power market is not delivering affordability or reliability, and pretending otherwise only raises the stakes for customers. Fixing this system will require swift action and the courage to put people ahead of a broken status quo. The longer we wait, the more Maryland families will pay.

David Owens is an engineer and energy policy expert with decades of experience shaping utility regulation, power markets, and grid reliability at the federal and state levels. He is CEO of Da’Vision & Strategies.