The Wolfe Power Trip

Research evidence excerpt

The Wolfe Power Trip

May 11, 2026

PJM White Paper on Longer-Term Market Fixes

Last week, PJM issued a white paper (link) that frames out the current structural issues that have led to the tightness in

capacity markets and subsequent political pressures. We were expecting this white paper from PJM on broader market

changes (COO Stu Bresler previewed it on our webcast a few weeks ago) and it’s good to see newly named permanent

CEO David Mills quickly take leadership on this. Overall, we found this to be a very thoughtful and sobering review of

where PJM sits and potential paths going forward (report link).

PJM views the current market issues as structural rather than cyclical, driven by unprecedented load growth, accelerated

retirement of generation, and new construction slowed by supply chain and permitting bottlenecks. PJM describes the

problem as a “credibility trap”, writing that "high scarcity prices that are economically necessary to signal the need for

investment become, in this environment, the trigger for governmental intervention that undermines the credibility of

those same prices. When prices spike and unhedged load is immediately exposed, policymakers face intense pressure

to intervene through price caps, emergency backstop procurements, or other administrative actions that signal to

investors that the revenue they are counting on to recover their costs may not materialize. Investors, anticipating further

intervention, discount the durability of the price signal. Capital stays on the sidelines; the shortage persists.”

PJM presents three preliminary frameworks that are intended to start a conversation, but does not recommend any one

path as they view this as a legislative decision rather than an engineering one. PJM CEO David Mills writes, “Those