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     The PJM Interconnection LLC’s grid serves more than sixty-five million people. Suppliers to the grid will receive fifty dollars a megawatt day to provide backup generating capacity for the year starting June 2022. The results of the last PJM Interconnection LLC’s grid auction were released Wednesday. That price for backup is the lowest price in eleven years. The results of this auction will deal an especially harsh blow to coal plants and nuclear power plants that are already struggling to compete in today’s energy market.
     The PJM Interconnection LLC’s grid auction is the most important event for generators across the eastern U.S. including Calpine Corp., NRG Energy Inc. and Exelon Corp. The auction dictates a big portion of their future revenues. The auction also plays a pivotal role in the shaping the electricity mix for the regions. It determines how much the region is willing to stick with coal and natural gas plants or replace them with wind and solar. Payments from the auction are designed to ensure that the electricity remains on from New Jersey to Illinois are set to drop sixty four percent.
     Brianna Lazerwitz is an energy analyst for BloombergNEF. She said, “I can’t imagine how nuclear is going to be able to cover all their fixed costs with such a low price.”
     Analysts had expected the price for backup to fall but they had not anticipated such a big drop. A conjunction of factors caused the price to plunge. The forecast of electricity demand was lower than last year. There are a bunch of new and cheaper power plants entering the market which is pushing down bids for power plant construction.  The lower prices could be especially painful for Exelon nuclear power plants in Illinois. There is increasing pressure on Illinois lawmakers to provide subsidies to the nuclear industry to bail out the Illinois nuclear plants.
     Kit Konolige is a Bloomberg Intelligence Analyst. He published research in which he stated that Exelon could possibly face a nine hundred million pretax charge. This Thursday, Exelon issued a statement that said that it planned to close two more of its Illinois nuclear power plants unless the state offers subsidies. Exelon shares dropped by about two percent before trading opened in New York on Thursday. NRG stock fell one and sixth tenths of a percent and Vistra stock fell two percent.
      Gayle Podurgiel is a power markets analyst at Moody’s. She said, “It’s a direct hit to the companies’ income statements.” She predicted that more coal plants would close because of the outcome of the auction.
       Natural gas is the dominant fuel for generating electricity in PJM because of shale natural gas production in the region. Analysis had anticipated that the PJM auction would hurt nuclear power and renewables while possibly boosting coal. This is a result of new rules that were imposed by regulators which were designed from the beginning to blunt any advantage that wind, solar or nuclear reactors gained from state subsidies.
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