Energy bills for Pennsylvania-New Jersey-Maryland Interconnection (PJM) customers are expected to increase by about 30% this year. This is due to a significant rise in capacity pricing passed from PJM to electric suppliers, and ultimately, PJM customers.
Capacity prices increased because of record-high bids secured during the PJM capacity auction last year. Prices continued to rise at this year’s auction, increasing by another 22% that will go into effect starting June 2026 – May 2027. As the demand for energy grows in this region, there’s a greater need for capacity to supply peak-demand days.
In this post, we’ll review what this means for PJM customers and what you can do to reduce costs on your energy bill over the next few years.
What is the PJM capacity auction?
The PJM Base Residual Auction (BRA) is an annual capacity auction where energy suppliers bid on future capacity commitments within the Mid-Atlantic region. PJM holds this auction each year to ensure sufficient load capacity to handle demand increases on the grid in future planning years.
Through the auction, PJM secures forward commitments from generators, demand response providers, and other capacity resources to be available during future periods of peak demand. These resources are compensated with a fixed capacity payment in exchange for their obligation to perform when needed. This ensures that, even in extreme conditions, PJM has sufficient reliable resources committed ahead of time — reducing the risk of shortages or system stress.
How does the PJM capacity auction work?
The PJM BRA auction takes place annually, with results affecting capacity prices 1-3 years into the future. PJM studies the amount of capacity needed and evaluates multiple variables that influence demand on the grid.
The PJM capacity auction sets a fixed price for capacity for a future delivery year. Load-serving entities (such as utilities or retail suppliers) pay this charge to PJM in exchange for access to sufficient generation capacity during peak demand periods. While the capacity rate is fixed for the year, a customer’s monthly capacity charge may vary depending on their contribution to the system’s peak (known as their Peak Load Contribution or PLC). These costs are typically passed through to end users as part of the supply or transmission component of their electric bill.
PJM auction results (2025)
In 2024, the PJM capacity auction cleared record highs, increasing from about $28 to over $250 for some customers. These increases affected the following companies in their respective states:
Additionally, it’s important to note that price increases vary by region. For example, PJM customers in Baltimore experienced a higher increase due to multiple grid factors in that area.
PJM auction results (2026)
In July 2025, PJM announced the results of the 2026/2027 auction. Like the 2024 auction event, PJM anticipated greater demand for energy, and procured 134,311MW of generation resources The greater demand for energy led to higher capacity prices, and in this auction, prices hit the FERC approved cap, increasing by another 22% to an RTO wide clearing price of $329.17/MW-Day.
What does this mean for PJM customers?
Electric customers within the PJM service territory should prepare for a 30% increase in their energy bills starting in June 2025. The next PJM capacity auction for the 2027/2028 delivery year is scheduled for December 2025 and is expected to clear at levels similar to the most recent results.
It’s important to note that electric suppliers are not dictating this charge. It’s passed along as a fixed rate from PJM and attached to the energy bill.
Why are my energy bills increasing?
Capacity prices are increasing due to greater demand on the energy grid and fewer generators in service to meet those needs. As artificial intelligence adds more stress on data centers around the country, more capacity is needed to meet energy demands on high-use days. Maryland, for example, is home to dozens of data centers, which puts more demand on their energy grid. That will naturally increase the price of capacity because PJM needs to supply more energy on peak-demand days. AI’s effect on the energy grid is a common trend that will likely impact suppliers throughout the rest of the country.
Additionally, there are fewer electric generators available to supply energy during this capacity auction. Older generators in this region are being retired due to inefficiencies and decarbonization efforts, leaving fewer providers available to supply energy to these regions. While renewable energy resources are growing, their intermittency—even when paired with battery storage—limits their ability to fully replace the consistent output of retiring thermal generators.
Since there’s greater demand on the grid and fewer generators to meet that demand, those converging factors led to a record-high increase in capacity pricing.
What can PJM customers do to keep costs down?
If you’re a PJM customer, here’s what you can do to keep your energy bills down.
1. Review these seasonal preparation resources.
We’ve put together a few seasonal checklists designed to help building and facility managers prepare for seasonal procedures. They ensure proactive building readiness for summer temperatures, maximize equipment lifespan, and improve overall energy efficiency.
Check out our summer seasonal checklist to prepare for the upcoming season, and here’s our winter checklist as well, so you can save it for later.
2. Measure usage patterns in your facility or building(s).
The better you understand your energy usage, the easier it is to limit usage and minimize your energy bill. Consider using resources like metering and sub-metering tools to get a feel for how much energy you’re using per department, equipment, or floor. If you’re noticing one area of your property is using more energy than expected, consider using some of the best practices in the next section to reduce your overall usage.
3. Minimize energy usage by following efficiency best practices.
Here are four ways you can minimize energy use in your building:
- Set thermostat settings based on building occupancy.
- Close blinds and shades during the day to keep offices cool.
- Shut down any non-essential equipment.
- Temporarily close buildings and encourage employees to work from home so you can keep building temperatures lower throughout the day.
4. Monitor the PJM capacity auction.
Some PJM customers may be surprised by this increase and wonder what they can do to prepare themselves for future changes in the energy market. PJM’s website provides consistent updates on its capacity auction, including key submission dates and milestones to monitor throughout the year. It also provides tools and helpful resources for PJM customers who are looking to learn more about the energy market in their area.
Next steps for PJM customers
PJM customers should prepare for this increase to affect their energy bills starting in June 2025. While capacity prices forecast high until 2028, you can monitor market trends on PJM’s website and follow the steps above to limit energy usage in your facilities. While we’re unsure how prices will change during the next capacity auction, it’s important to keep an eye on this market and understand how these factors can increase demand on your energy grid.
Reach out to your Vicinity Energy account manager with any questions or concerns.
