A closer look at PJM, the obscure energy giant driving up electricity costs in the Northeast

Angry New Jersey residents and the politicians who represent them spent the summer demanding to know why their electricity bills suddenly jumped by 20% in June.

Focus quickly shifted to an organization called PJM Interconnection in Valley Forge, Pa., which oversees the electricity grid serving 67 million people in New Jersey and a dozen other states from Kentucky to Michigan, plus the District of Columbia.

“We’re the air traffic controller for the grid,” PJM says.

PJM’s management of the complex and ever-shifting energy markets now looms as a decisive issue in the New Jersey governor’s race. But the political push to assign blame for the recent rate hikes has obscured the reality that the century-old PJM has grown into a huge and, critics argue, opaque bureaucracy that restricts scrutiny by the press and public.

A review of the organization’s most recent annual financial report filed with the Federal Energy Regulatory Commission (FERC) shows that PJM received $465 million in ratepayer money in 2024, spending more than $95 million of that amount on executive salaries and administration.

PJM CEO Manu Asthana, who has led the organization since 2020, received a base salary of $1.2 million last year. Eleven vice presidents working under Asthana collected base pay ranging from $389,000 to $493,000, records show.

Analysts point out that the total compensation for those PJM executives is probably two to three times higher than the reported figure when annual bonuses and other compensation are included. They say such bonuses, however, are not reported in the financial data PJM is required to send to federal energy regulators.

Because PJM is technically not a government agency, the organization claims it is not subject to federal or state open-records and open-meetings laws.

While officials there say many PJM meetings are open to the public, energy market analysts and public watchdogs have complained that attendance is restricted at some important subcommittee hearings where key financial issues are discussed. The organization also has strict rules limiting the dissemination of meeting conversations and developments.

“Members of the media are reminded that speakers at PJM meetings cannot be quoted without explicit permission from the speaker,” according to the organization’s website. “PJM members are reminded that detailed transcriptional meeting notes and whiteboard notes from brainstorming sessions shall not be disseminated. Stakeholders are also not allowed to create audio, video or online recordings of PJM meetings.”

Environmental activists and other critics who have tracked PJM’s activities for years say PJM operates with a secrecy that keeps the public in the dark about how the power grid is managed.

“What you see is a closed shop that has amassed huge power to affect the lives of consumers,” said Tyson Slocum, director of the energy program for Public Citizen, a nonprofit consumer advocacy group based in Washington, D.C. “The powerful utilities and Wall Street financial traders have a seat at that table. Everyday citizens that are paying unfair prices for electricity are left out.”

Slocum argues that PJM policy is slanted toward fossil fuel interests that own and operate the power plants dominating the energy grid. PJM’s central mission, he says, is protecting markets for the utilities instead of keeping costs low for consumers.

In 2018, Public Citizen filed a complaint with federal regulators that showed how PJM had used ratepayer revenue to make about $450,000 in political donations and millions in allegedly undisclosed lobbying fees.

The complaint also called PJM’s efforts to record stakeholder meetings where utility rates are discussed “sparse and haphazard.” “PJM’s failure to record or transcribe stakeholder meetings where proposed tariffs and rates are deliberated is no longer an acceptable practice,” according to the complaint.

The Federal Energy Regulatory Commission, which oversees PJM and other regional transmission organizations that manage power grids across the country, sided with PJM. The commission ruled that the organization’s donations to political groups like the Republican and Democratic governors associations were part of its “educational” mission about energy distribution.

Despite the ruling, PJM officials stopped making such contributions and say PJM has made no political donations of any kind since 2018.

“The fact remains that PJM is a scam,” Slocum said in a recent interview with The Jersey Vindicator. “Its activities take place largely in the dark, and the public is paying hundreds of millions for an organization that exists first and foremost for the benefit of utilities.”

PJM representatives flatly dispute that portrayal, insisting its management of the grid has saved taxpayers millions while ensuring that electricity is reliable and plentiful. Representatives for PJM also highlight its role in helping states such as New Jersey pursue renewable power projects such as solar and wind.

In years past, New Jersey political leaders have heaped praise on PJM for helping to establish nontraditional fuel sources and credited the organization with saving millions for taxpayers on such projects.

PJM spokesman Jeff Shields, in a written response to questions for this story, said the organization is a nonprofit subject to the same reporting requirements as other federally regulated utilities. He noted that PJM holds more than 400 meetings annually, all open to the public and documented with posted agendas and minutes, as detailed in its “oversight and transparency” fact sheet.

PJM, he added, is overseen by an independent board of managers who have no financial interest with any power utilities operating within the grid.

“Our region, and the whole U.S., is faced with a serious challenge of meeting electricity demand over the next five years,” Shields wrote. “While we have no issue discussing our transparency, your line of questioning on a 7-year-old complaint feels frankly irrelevant and not a productive use of your time or ours.”

Public advocates counter that Shields’ response omits the fact that PJM, which has several profit-making subsidiaries, is technically not a nonprofit and has not filed IRS reports that would require full disclosure of executive compensation.

They say official minutes and other documentation of PJM meetings are also sketchy, far from a full reflection of the discussion the public should hear.

“PJM has the power of government, but it doesn’t have to be fully transparent like we should expect from any government agency,” said Bill Wolfe, a former assistant commissioner of the New Jersey Department of Environmental Protection who writes a public policy blog. “They have a huge impact on consumers, yet a lot of their decisions are made in secret. It’s an abomination.”

Wolfe said PJM’s transparency issues cover up basic flaws in so-called energy “capacity auctions” that prefigured this year’s electricity rate hikes. That argument has been embraced by many politicians in New Jersey, including Democratic gubernatorial candidate U.S. Rep. Mikie Sherrill.

“There is no doubt about it: The big price we’re seeing for power is driven a long way by PJM’s closed-door, self-serving policies,” Wolfe said.

Republicans in New Jersey, including GOP gubernatorial nominee Jack Ciattarelli and much of the state’s business community, blame New Jersey’s energy woes squarely on Gov. Phil Murphy, who limited development of fossil fuel sources while betting heavily on a wind power initiative that collapsed.

New Jersey, under Murphy, set targets to achieve 100% clean energy by 2035, mostly through offshore wind and solar energy.

“We have continuously warned that creating policies that set artificial deadlines for actions and discouraging new generation from sources that include natural gas, nuclear as well as other renewables, will result in much higher energy prices for our residents and businesses,” said New Jersey Business & Industry Association Deputy Chief Government Affairs Officer Ray Cantor in a statement earlier this year.

Even neutral observers point out that the state largely ignored multiple warnings from PJM in recent years that electricity costs were headed higher amid a changing market driven by energy-hungry warehouse development and the predicted arrival of massive AI data centers that require huge energy loads.

Greg Lalavee, business manager for the 7,000-member Local 825 of the International Union of Operating Engineers, said PJM has proven to be a reliable partner in developing projects that have helped New Jersey meet its energy needs — projects that also sparked the economy and created new jobs.

But in recent years, he said, the state may have moved too quickly from some of the legacy power producers as it pursued carbon-free replacements. A better mix of old and new would have smoothed the transition to renewables, he said.

Lalavee added that New Jersey may now be falling behind nearby states competing for primacy in the new, data-centered economy.

“There’s no question we have to address climate change and work in new energy sources,” Lalavee said. “Believe me, as a trained crane operator, I would have been fascinated to work on wind turbines in the ocean. But now that’s gone at the moment, what’s left?”

As New Jersey’s power debate comes to a head, public officials from both sides of the aisle say some change has to come to prevent surprise rate hikes in the future. One item certain to come under continuing scrutiny is PJM’s periodic auctions of energy capacity that attempt to align production with predicted future energy use.

Capacity auctions hinge on opaque, complex market models that many officials argue must be rethought and subjected to greater public scrutiny. It was a 2024 auction, they say, that set off the current climb in electricity prices.

In January 2024, Mark Christie, a former U.S. Marine from Virginia and then the widely respected Republican chairman of the Federal Energy Regulatory Commission, took aim at PJM’s capacity auctions.

Arguing to open up and simplify the auction process, Christie voted to reform the auctions to address criticism that they were burdening consumers with added costs.

“One could … make a credible argument that [the capacity market’s] sheer complexity renders it unjust and unreasonable,” Christie wrote. “I have described it before as Rube Goldberg-esque and as replete with hopeless complexity.”

Quoting the poet Dante, he offered advice for anyone who would try to understand how the PJM-managed capacity market operates: “Abandon all hope, ye who enter here!”