Is the competitive power market model broken? Why changing the rules around generation could be an answer to rising electricity prices.

The core argument. Karim Kazami (EVP Transmission & Development, Exelon) contends PJM's competitive generation model is no longer producing enough new supply to meet demand, and that the near-term fix is to let regulated utilities like Exelon own generation again — not to re-regulate the market, but to add utility-built projects as a competing option alongside independent power producers (IPPs), with state commissions choosing the cheapest bid. "Why would you ever want to take any tool out of your toolbox when you're facing a crisis," he says.

The mechanism. PJM's capacity market — an annual auction paying generators to guarantee availability — was designed for a low-growth world. Kazami says PJM territory now faces roughly 25% demand growth over four years, driven substantially by data centers (a single hyperscale customer can now request a gigawatt, versus 20 MW being "large load" five years ago). Because generation investment decisions require 20–30 year payback horizons, a one-year price signal doesn't give IPPs confidence to build, even when auction prices spike. In last month's PJM auction, ComEd (Chicago) prices would have cleared at $775/MW-day uncapped versus roughly $28/MW-day a few years ago; the 13 PJM-state governors intervened and capped it at $325/MW-day. Over the past two years, PJM customers paid $32 billion in capacity costs while total capacity actually fell by 1.2 GW — "customers are paying more, and they're getting less," Kazami says. He argues even the uncapped $775 price likely wouldn't have triggered material new IPP construction given multi-year commitment risk.

On the bill itself, Kazami breaks it into two pieces: roughly 25% is the regulated utility's transmission/distribution charge (reviewed in a ~10-month rate case), and 75% is a pass-through generation-supply cost set by the competitive market with no regulatory review. He argues that portion is what's driving the affordability crisis and that only more generation supply — regardless of who builds it — can bring it down, even if utility ownership adds a modest financing-return increment to the regulated 25% slice.

He points to the six vertically-integrated (non-deregulated) PJM states as evidence the model works: Virginia, which allows Dominion to build generation, saw capacity price increases of about $2 on average bills in the last auction versus $18 in Maryland, which has built no new generation and imports roughly 40% of its power (mostly from Pennsylvania), a dependency Kazami calls unsustainable, especially with two more coal plants retiring. Exelon has also rolled out "transmission security agreements" requiring large-load customers (data centers) to commit to a 10-year cost obligation for grid upgrades, with 15 signed to date protecting customers from over $1 billion in exposure if projects don't materialize.

What has to be true. For Kazami's fix to work, state legislatures or commissions must explicitly authorize utilities to propose and build generation again — this is a state-level policy change, not a PJM rule change, since PJM already contains vertically-integrated states operating this way. He frames it as adding utilities to existing or new RFP processes so their regulated-cost bid becomes "the price to beat," with IPPs still free to underbid. He also argues reforming the capacity market itself is necessary but too slow relative to the urgency: PJM has warned of a 6.8 GW shortfall versus its safe 20% reserve margin, and FERC chair Laura Sweat called the numbers "alarm bells for a call to action." Kazami cites Exelon CEO Calvin Butler's framing: "We are driving a car with the check engine light on right now" — fix it now or face a costlier breakdown later, potentially rolling brownouts in central Maryland as early as next summer.

Where it conflicts. Amy Myers-Jaffe pushes on two points without fully accepting Kazami's framing. First, she questions why utilities can't deploy batteries now (she says installable in one to two years given supply chain) rather than waiting on multi-year generation builds, given the immediate reliability crisis; Kazami responds that overbuilding batteries plus later generation isn't a real risk because any resulting oversupply would simply lower customer prices, and that Exelon is pursuing an "all-of-the-above" approach (batteries, solar, wind, gas, new nuclear) via integrated resource planning. Second, she notes that deregulation's academic case for lower system-wide costs ignored that 3–6 million Americans have electricity shut off annually for nonpayment, and asks how utility-set rate structures would be made fairer if utilities regain generation ownership. Kazami points to the existing 10-month rate case process and state-specific low-income rate classes (citing Maryland's) as the mechanism for addressing that, without proposing structural changes beyond letting commissions choose among more options. Ed Crooks separately challenges the logic that more utility-owned generation lowers overall bills given that new investment requires a return passed to customers; Kazami maintains that a modest increase in the regulated 25% of the bill is outweighed by supply-driven declines in the unregulated 75% generation-cost portion.