Electricity bills are set to increase once more following the latest PJM Capacity Auction for 2026, which showed a 22% jump in capacity charges. This adds to the steady rise in electricity costs across the 13 state PJM region—including New Jersey, Pennsylvania, Maryland, Washington DC, Ohio, Indiana, and Illinois—where rates have already nearly doubled since 2020.
In July 2024, PJM held its Base Residual Auction (BRA) for the year 2025/2026, revealing a dramatic surge in capacity prices—9 to 10 times higher than previous years. This reflects major changes in electricity demand, generation capacity, and investor risk.
Steep Capacity Cost Increases
- 2025/2026 capacity costs: Estimated at $14.7 billion
- 2026/2027 capacity clearing price: $329/MW-day, up from $28 in 2023 and $269 in 2025
- This will cost consumers an estimated $18 billion for the year 2026/2027 alone
Why Prices Are Rising: Demand and Resource Pressures
Several factors are putting pressure on the grid and driving up costs:
- Explosive growth in AI and high-performance computing, with new data centers adding several gigawatts of load
- Faster-than-expected electrification of transportation and industry
- Reindustrialization and onshoring of manufacturing, boosting energy needs
For example: Amazon’s planned data center in Indiana, tied to its Anthropos project, will eventually use 2.2 GW—enough to power over 1 million homes.
These developments are reshaping how and where capacity is needed, while also contributing to interconnection delays.
How will PJM Auction for 2026 affect your business?
Medium Size Restaurant
| Year | Usage KW/Day | Daily Cost | Annual Cost | % Increase |
| 2024 | 55 | $1.57 | $574.15 | |
| 2025 | 55 | $14.87 | $5,428.28 | 945% |
| 2026 | 55 | $18.10 | $6,908.09 | 127% |
Small Manufacturer
| Year | Usage KW/Day | Daily Cost | Annual Cost | % Increase |
| 2024 | 435 | $12.44 | $4,540.97 | |
| 2025 | 435 | $117.62 | $42,932.76 | 945% |
| 2026 | 435 | $143.19 | $52,263.97 | 122% |
How PJM’s Capacity Market Works (Quick Overview)
PJM, a regional transmission organization (RTO), runs auctions to secure enough power supply to meet future peak demand plus reserves, typically three years in advance (called the BRA). Participants include:
- Power plant owners (gas, coal, nuclear, renewables)
- Demand response providers
- Energy storage operators
- Utilities and competitive retail suppliers (Load Serving Entities)
Prices are set based on supply and demand, and all suppliers get paid the same clearing price. If a resource isn’t delivered when needed, penalties apply.
At MSI Utilities we will help our clients develop a strategy that aligns with your business’s consumption profile as well as advice on ways to decrease consumption. Contact your MSI Rep to help navigate increasing electricity prices.
Tom Williamson
President, MSI Utilities, Inc