Gov. Josh Shapiro: PJM model of raising prices to spur growth is 'completely broken'

Speakers

Josh Shapiro — Governor of Pennsylvania

Brian Sullivan — Anchor

Governor Shapiro argues the PJM grid operator's model of raising prices to incentivize power generation is "completely broken" and has failed to add capacity (citing a D-minus grade).
A coalition of 13 Governors and the White House is pressuring PJM to extend price caps for another two years to protect consumers (65 million Americans).
Shapiro proposes a bifurcated market where residential rates are capped, while "Hyperscalers" and "Data Centers" participate in a secondary auction to pay for their specific incremental energy needs.

Ticker	Direction	Speaker	Thesis	Time
INDEPENDENT POWER PRODUCERS	AVOID	Josh Shapiro Governor of Pennsylvania	Shapiro states the "PJM model of raising prices... simply does not work" and he has successfully sued to implement price caps, which he now wants extended for two years with White House support. Independent Power Producers (IPPs) in the PJM region rely on capacity auctions for a significant portion of revenue. If political pressure forces PJM to cap these prices, the expected windfall from tight supply will not materialize for these stocks. Regulatory risk is high for generators banking on uncapped auction rates. PJM might ignore the Governors and raise prices anyway to ensure grid reliability.	—
DATA CENTERS /HYPERSCALERS	WATCH	Josh Shapiro Governor of Pennsylvania	Shapiro outlines a principle where "If you're a big hyperscaler... you've got to be able to bring and pay for your own energy" via a "secondary auction." This shifts the cost burden of new generation explicitly onto Data Centers rather than spreading it across all ratepayers. While it ensures they get power (positive for growth), it likely increases their specific operating costs (negative for margins) compared to a subsidized model. Watch for the implementation of "secondary auctions" which could formalize higher energy costs for tech giants. If the secondary market fails to develop, data centers may face power shortages in the PJM region.	2:58