PJM Heat Stress: The Accountability Chart the Plea for AC Cuts Hides

ZeroHedge reported this week that the PJM Interconnection, the nation's largest grid, is under severe stress as a heat dome drives peak demand near 158 GW, forcing real-time prices above $900/MWh and prompting New York City Mayor Zohran Mamdani to plead with residents to set their air conditioners to 78°F.^[1] The report credits natural gas, coal, and nuclear for keeping the lights on, and warns that retiring dispatchable generation leaves grids fragile. But that frame omits the half-century of monopoly accounting that built this brittleness.

PJM's 65 million customers are served largely by investor-owned utilities that have, for decades, collected depreciation and maintenance allowances in rates for distribution poles, transformers, and vegetation management, then underspent, paid the cash out as dividends, and deferred the work. The canonical proof is PG&E: its wildfire catastrophe was traced to a pole inspection and vegetation management budget that the utility's own filings showed was underfunded while it paid billions in dividends. Texas's February 2021 blackout investigation found that frozen wind turbines were a symptom, not the cause; the root was a failure to winterize gas infrastructure that regulators had flagged and utilities had ignored, saving money that flowed to shareholders.

Now PJM's member utilities, including PSEG, FirstEnergy, Exelon, and Dominion, are requesting or already collecting storm hardening and resiliency riders. The accountability chart pairs each utility's SAIDI/SAIFI, including major event days, against its distribution O&M per customer and dividend per customer from FERC Form 1. When a utility pleads poverty or asks for a surcharge, produce that chart. New York's Con Edison, for example, reported SAIDI-with-MEDs rising while blue-sky SAIDI stayed flat, the classic sign of a system that fails under stress, and simultaneously paid out over $800 million in dividends in 2023 while deferring pole replacements.

The municipal and cooperative control group tells the story: same weather, same equipment, no shareholder dividend. APPA's data from EIA Form 861 shows public power customers consistently experience fewer outage minutes, even during major events. In PJM, munis like the American Municipal Power pool and co-ops like Old Dominion Electric Cooperative maintain reliability at lower cost per customer, because every dollar collected goes to the wire, not to a holding company. The rebuttal that IOU territories are uniquely hard collapses when in-state munis carved out of the same footprint, like Cleveland Public Power vs. FirstEnergy, show better reliability at lower spend.

The remedy is not more dispatchable fossil generation, but performance-based regulation that puts reliability targets in rate design. Hawaii's 2020 framework ties revenue to SAIDI/SAIFI targets, removing the guaranteed return on capital that rewards building over maintaining. Britain's RIIO model uses multi-year revenue caps with symmetric penalties and rewards, and a total expenditure allowance that kills the bias toward new wires over old pole inspections. Until a utility's hardening rider is paired with a prudence review that disallows costs attributable to past deferred maintenance, and a penalty mechanism that makes shareholders eat the outage, every plea to turn down the AC is a request to pay for the grid twice.