PJM announced the results of the 2027–2028 Base Residual Auction (BRA) at $333.44/MW-day. While the headline is familiar, the underlying signals are becoming harder for energy customers to ignore.
Once again, the auction cleared at the price cap, reinforcing that capacity resources remain tight across the PJM footprint. PJM procured 134,479 MW of capacity, which was 6,623 MW short of the region’s target reliability margin. It's the first auction in PJM history the entire RTO fell short, an outcome that highlights the growing strain the proliferation of data centers has placed on the system.
The results point to structural shifts that will influence capacity costs and risk exposure for years to come.
The 2027–2028 auction cleared at $333.44/MW-day throughout the entire PJM footprint. The price is the maximum allowed under current auction rules. While temporary price caps were designed to limit volatility, clearing at the ceiling in back-to-back auctions signals a persistent imbalance between supply and demand.
Capacity prices reflect the cost of ensuring enough resources are available during peak demand periods. When prices repeatedly hit the cap, it suggests the system is operating with little margin for error. While this does not mean outages are imminent, it does indicate less buffer in the system as PJM plans for extreme weather events and peak conditions.
Several factors contributed to this outcome:
- Rapid load growth, particularly from data centers.
- Limited new generation entering the market.
- Ongoing interconnection delays.
- Planned and economic retirements of existing resources.
Together, these pressures are tightening capacity availability faster than new resources are coming online.
Capacity auctions occur years in advance, but their financial effects show up directly on customer bills. The 2027–2028 results reinforce several important planning considerations, namely, capacity costs are likely to remain elevated. Furthermore, budget volatility is becoming the norm, not the exception.
Dismissing the trend carries increasing risk.
For many organizations, capacity charges are now one of the most controllable—and overlooked—components of the electric bill.
While customers can’t control capacity auction results, they can control their exposure . Strategies such as demand response and peak load management can meaningfully minimize the impact of high capacity costs. The sooner business customers weigh available options and begin taking necessary implementation steps, the more control they have over the impact these auction results will have on budgets.
PJM plans to conduct an Incremental Auction ahead of the delivery year, and stakeholder discussions around market reform, interconnection timelines, and large-load integration are ongoing.
For energy customers, the question is no longer whether capacity costs matter but how proactively they choose to manage them.