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Affordability requires more power plants

Pennsylvania has powered America for generations. From the coal that fueled the Industrial Revolution to the natural gas boom of the Marcellus Shale, our state has long been one of the nation’s energy leaders.

That is why it is frustrating for many families and small businesses to see their electricity bills rising. In a state that produces so much energy, electricity should be abundant and affordable.

The truth is, Pennsylvania does not have a resource problem. We have one of the world’s largest natural gas reserves and the ability to produce far more electricity than we do today. The real challenge is that we are not building enough power plants to keep up with growing demand.

Today, about 60 percent of Pennsylvania’s electricity comes from natural gas and 31% from nuclear, while coal accounts for only about 5 percent and the remaining is renewables.

The development of the Marcellus Shale transformed our state into the second-largest natural gas producer in the country. The shale revolution has created jobs, strengthened our economy, and improved air quality.

Using Pennsylvania natural gas to generate additional electricity would help keep costs down while continuing to reduce emissions.

Unfortunately, our current system makes it harder to plan and build the power plants we need.

Years ago, Pennsylvania changed how electricity is produced and delivered. Utilities were required to sell most of their power plants. Today, companies like PECO and PPL mainly focus on delivering electricity through the poles and wires that connect homes and businesses to the grid.

They do not own the power plants that produce the electricity.

Instead, electricity is purchased through a regional market run by PJM, which coordinates electricity across several states. Power plant owners sell electricity through auctions, and utilities must buy it at whatever price the auction sets.

By law, those costs are passed directly to consumers. Utilities cannot mark them up for profit.

Most consumers do not realize this. When their electric bill increases, they often assume the local utility raised the price. In reality, utilities do not control the price of electricity (or natural gas). They simply pass along those costs at the same price they pay.

The real problem is supply.

Older power plants have been shutting down in Pennsylvania and across PJM, demand for electricity is growing, and new power plants often take years to get approved and connected to the grid. When supply gets tight, prices in these auctions rise quickly.

And when those prices rise, Pennsylvania families and businesses pay the difference.

Pennsylvania should not wait for shortages before new power plants are built. We should be planning ahead.

One clear solution is to take advantage of the natural gas resources we have by building more modern power plants, fueled by natural gas. These plants are efficient, reliable, and far cleaner than older forms of electricity production. And there’s no better place to site those plants then here, close to the fuel source.

When I served in the Pennsylvania House of Representatives, I supported legislation to allow utilities to develop microgrids–smaller power systems that could supply electricity to hospitals, emergency services, or even entire communities.

The goal was to strengthen reliability and help communities prepare for future electricity needs.

Today, many experts believe Pennsylvania should allow regulated utilities to once again build and own power plants under the oversight of the Public Utility Commission. Utilities operate under strict regulation. Their allowed earnings are set by regulators, their investments must be approved, and consumer advocates participate in the process to protect ratepayers.

Allowing utilities to build power plants would make it possible to plan for long-term electricity needs instead of relying entirely on a market that often reacts only after shortages develop.

Unfortunately, some of the debate in Harrisburg misses the real issue.

In his recent budget address, Governor Josh Shapiro said he plans to appoint a special deputy to oversee electricity rate increases. But the governor does not have the authority to control electricity prices in the wholesale market where those costs are set.

Those prices are determined through the PJM market and passed through to consumers by law. Creating another government position will not build a single new power plant or increase the supply of electricity.

What Pennsylvania really needs is more power.

Demand for electricity is expected to grow rapidly in the coming years as new manufacturing facilities, data centers, and emerging technologies like artificial intelligence require enormous amounts of reliable electricity.

Pennsylvania has every advantage needed to meet this challenge. We have abundant natural gas, skilled workers, and a long history of energy leadership.

By building more modern natural gas power plants and planning for the future, Pennsylvania can keep electricity affordable while continuing to lead the nation in energy production.

Fred Keller served in the state Legislature and, representing Lycoming County and surrounding counties, the U.S. House of Representatives.

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