FERC Commissioner LaCerte Says PJM Board Passivity Threatens Grid Serving 70 Million
LaCerte's Philadelphia remarks frame PJM's stakeholder gridlock as a governance failure rooted in board culture, raising the prospect of direct federal intervention.
FERC Chairman Laura Swett announced on Wednesday (2026-07-22) the creation of a task force on grid-enhancing technologies, covering dynamic line ratings and other tools that can expand capacity on existing lines. The move runs in parallel with sharper federal pressure on PJM's internal governance — and the two tracks together mark a more interventionist posture from FERC toward the grid operator serving nearly 70 million people across 13 states.6,1
The harder edge in Washington's posture traces back to FERC Commissioner David LaCerte's remarks on Thursday (2026-07-09) at a WIRES conference in Philadelphia. The PJM status quo is "really untenable," LaCerte said, describing a stakeholder process that has "continued to just grind into gridlock." These were among the sharpest public comments on record from a sitting commissioner about a single grid operator.3
LaCerte's diagnosis went beyond the mechanics of the stakeholder process. PJM's reluctance to exercise the authorities it already holds, he argued, stems from a board culture shaped by years of erosion. "This is a cultural quagmire that they've developed by eroding the board in the past and creating this fear of board members being terminated to where they're not using their authorities," he said. The board, in his reading, has been conditioned into passivity — and passivity is a choice with consequences for investment and reliability.3
The engagement gap with state regulators compounds the picture. LaCerte said PJM is not coordinating with states because it does not want to step out of line with its own stakeholder community — a dynamic that leaves state-level demand signals underweighted in planning decisions. For a multi-state grid where generation investment requires multi-state political buy-in, that insularity carries real cost.3
PJM real-time prices at Western Hub were trading at $62.49 per megawatt-hour on Friday (2026-07-24), reflecting a tightening supply picture that has driven federal officials to consider more direct action on market design. The interconnection queue, meant to channel new supply onto the grid, is under strain as data centre load growth accelerates. Bilateral contracts between large power users and developers are emerging as an alternative route, but that approach routes around the underlying grid buildout problem rather than solving it.1,5
The demand-response side illustrates how gridlock translates into market inefficiency. Voltus, a demand-response aggregator, initially enrolled roughly 20,000 customers through Chicago-area utility Commonwealth Edison, but was only able to get approximately 4% of those customers through the utility's enrollment process, Canary Media reported in June (2026-06-04). The failure was attributed in part to utilities not sharing smart meter data in a workable format — a narrow technical failure embedded in the same broader governance problem LaCerte named.2
Exelon CEO Calvin Butler has publicly warned of blackouts in 2027, citing insufficient new supply. Butler wants states to allow utilities to build new generation — a route that shifts investment risk from developers onto ratepayers. Critics argue that model socialises risk while keeping returns private; the current market structure was designed to do the opposite.4
The investment gap has longer roots than the current demand surge. One analysis of utility investment between 2004 and 2024 found the industry had been underinvesting by close to 50% compared to what system adequacy required, a finding the authors said pre-dated the COVID period. Utilities, the analysis argued, deploy capital only when returns exceed their cost of capital — and for much of that period, the incentive structure did not clear that bar.4
FERC has tools designed to shift that calculus. Transmission owners that participate in a regional transmission organisation are eligible for an extra 0.5% return on equity, along with construction work in progress treatment that lets utilities recover expenses during a project rather than at completion. LaCerte's point is that PJM's internal culture is preventing even these existing tools from being deployed effectively.3
The new grid-enhancing technology task force announced by Chairman Swett is exploring whether financial incentives could accelerate utility adoption of dynamic line ratings and related capacity tools. How quickly that initiative can deliver results — compared with the slower track of interconnection queue reform — is now the operative question for capacity investors tracking the region. The practical test for LaCerte's intervention push remains whether FERC moves from public criticism to a formal order directing PJM to revise its governance structure or accelerate state consultation. Without that step, the Philadelphia remarks are a warning on record, not a change in trajectory.6,3