The operator of the mid-Atlantic’s power grid has reached an agreement with Pennsylvania Gov. Josh Shapiro that he and other state leaders in the region say could save residents billions on their electric bills.

The settlement, announced by Shapiro’s office Tuesday, comes less than a month after the Pennsylvania governor filed a complaint before federal utility regulators calling on PJM Interconnection, operator of the regional power grid, to impose a lower price cap on its next energy auction.

After filing his complaint in December, Shapiro drew support for his demands from Maryland Gov. Wes Moore, along with the governors of Delaware, Illinois and New Jersey. Moore sent letters this month both to regulators at the Federal Energy Regulatory Commission and PJM leadership supporting the lower price cap.

PJM, a nonprofit entity charged with running the power grid serving some 65 million people in the mid-Atlantic states and west to Illinois, has drawn the ire of consumer watchdogs, climate advocates and politicians in recent months. The grid operator has been managing a backlog for connecting new power sources onto its system, which contributed to a historic price spike at an electricity auction in July that is expected to cost customers across its system $12.5 billion over the last auction.

Those costs won’t start showing up on bills until June.

But the coalition of governors estimated that without their suggested lower price cap, the next PJM auction, scheduled for this summer, will cost ratepayers across the system another $21 billion in the next two years over what they would otherwise pay.

“When PJM’s next auction was set to result in historic price hikes, I filed a lawsuit to stop this price hike on consumers and defend Pennsylvanians,” Shapiro said in a statement announcing the settlement. “PJM did the right thing by listening to my concerns and coming to the table to find a path forward that will save Pennsylvanians billions of dollars on their electricity bills.”

PJM spokesperson Susan Buehler shared a notice that PJM sent out to its members Tuesday explaining that the grid operator had accepted an invitation to meet with the Shapiro administration and discuss its concerns.

The two sides agreed to impose both a cap and a floor on the electricity prices at the upcoming auction. The agreed-upon cap represents a 35% decrease from the prior level.

Some consumer advocates welcomed Tuesday’s settlement as a first step.

Emily Scarr, senior advisor to Maryland PIRG and a critic of PJM’s grid management, thanked Shapiro, Moore and the other governors and credited them with saving residents billions for residents on their utility bills.

“But while this is welcome news, Marylanders still face major utility bill spikes this summer, and the underlying problems with PJM remain,” Scarr said. “Our state leaders should continue to pressure PJM to fix its broken interconnection process, stop holding up clean energy, and reform its decision-making structure to prioritize the public interest.”

Buehler pointed to steps PJM has taken to improve its backlog and get new power sources onto the grid. PJM completed required studies for hundreds of projects last year totaling close to 70 gigawatts of power, and today’s delay getting these developments onto the system “has nothing to do with PJM,” she said.

Correction: This story has been updated to correct the name of PJM Interconnection and Susan Buehler’s surname.