Households and businesses in the PJM Interconnection, the nation’s largest power market, will pay a record $16.4 billion to electricity generators to ensure power is available by mid-2027.
The outcome of the PJM auction for future capacity released Wednesday underscores supply challenges for the grid operator that stretches from Illinois to Virginia and serves big mid-Atlantic markets like Pennsylvania and New Jersey. PJM is striving to meet rising demand from data centers for artificial intelligence.
Payments to secure generation are a relatively small part of utility bills. But it has leaped from paying suppliers $29 daily per megawatt of capacity in the 2024-2025 delivery year to $333 after the latest capacity auction. The escalating costs are tossing fuel onto electricity affordability concerns across the country.
PJM’s capacity prices have been held down by a two-year price cap demanded by Pennsylvania Gov. Josh Shapiro, whose state is the largest power producer in PJM’s 13 state region.
