PJM Capacity Prices Clear All-Time Highs

The $269.92/MW-day result of the PJM capacity auction for the 2025-2026 delivery year caught the attention of energy industry watchers. Comparatively, the 2024-2025 auction result was $28.92/MW-day. Simply put, that's over an 800% increase. These results are likely to have a substantial impact on electricity costs. As such, we want to provide our readers with some resources for managing these costs. 

Why It Matters

Basics You Need to Know

The recent capacity auction results impact the 2025-2026 delivery year. The substantial increase in the capacity auction result is a direct consequence of a tightening supply/demand balance. Namely,

• 40 GW of existing generation in PJM are at risk of retirement by 2030. 
• PJM’s long-term load forecast shows demand growth of 1.4% per year for the PJM footprint over the next 10 years.
• Despite renewable's sizable capacity, the rate of completion has been approximately 5%. That pace is insufficient to keep up with expected retirements and demand growth by 2030.

While the auction rates vary from year to year, trends stress the importance of actively managing your electric consumption.

Background Information

Answers to questions we're hearing. 

Q: What's PJM?

A: PJM is a regional transmission organization (RTO) that coordinates the movement of wholesale electricity across 13 states and the District of Columbia. This includes Ohio. PJM is responsible for ensuring grid reliability throughout the year - even during extreme weather conditions. Part of this also means making sure there's sufficient capacity to meet consumer's needs in the future.

Q: What are capacity prices?

A: Simply put, your capacity charge is the rate you pay to assure sufficient electricity supply at a point in the future. The rate is primarily set by the results of PJM's capacity auction.

Q: What's the capacity auction?

A: The PJM capacity auction helps secure sufficient power supply in the future. Check out this excellent explanation about how the capacity auction works, from Energy News Network. 

Q: Why did the capacity rate increase so much?

A: According to PJM, "Specifically, the drivers of higher prices in this auction include:

• Decreased supply offers into the auction due mainly to generator retirements.
• Increase in projected peak load.
• FERC-approved market reforms, including improved reliability risk modeling for extreme weather and accreditation that more accurately values each resource’s contribution to reliability."

Help For You

Resources and Planning

First, to help you budget, we can prepare a forecast report outlining the projected impact of these changes. We can meet and review the report and discuss ways that you might be able to offset some of these costs by making strategic adjustments to your electric consumption.

Second, your capacity charges are based on your usage during peak grid hours throughout PJM. If you can reduce your consumption during these times, you’ll be charged less following year. We can explain exactly how this works and help you map out a plan for using this method to reduce your costs. To help you successfully manage your capacity charges in this manner, we send hot weather alerts to inform you of the times one of the seasonal peak grid times may be set. You must opt into these alerts and you can do so by following this link.