PJM Interconnection Capacity Costs Skyrocket, Driving Up Electricity Bills in Member States
Electricity bills in states within the PJM Interconnection, including Pennsylvania, Ohio, and Maryland, are experiencing significant increases due to soaring capacity costs. PJM, which manages the electricity grid for 13 states and the District of Columbia, sets these capacity costs through auctions designed to ensure sufficient power supply during peak demand. For the 2025/2026 delivery year, capacity clearing prices jumped by 833% from the prior auction. This dramatic increase is attributed to several factors: PJM's revised method for counting available power, which gives less credit to solar and wind resources; the retirement of older power plants (coal and gas) without sufficient new generation to replace them; and rapidly rising electricity demand driven by artificial intelligence and data centers. The Federal Energy Regulatory Commission (FERC) has capped subsequent auction prices to protect consumers, but auctions have consistently hit these caps, indicating persistent supply constraints.
