PJM Capacity Auction Results: What They Could Mean for Your Electric Bill

On July 14, 2026, PJM Interconnection released the results of its latest capacity auction, providing an early look at one of the costs that will shape electricity prices from June 2028 through May 2029.

The auction cleared at the Federal Energy Regulatory Commission (FERC)-approved price ceiling of $325 per megawatt-day (MW/d), marking the third consecutive auction to reach the maximum allowable price — and reflecting continued pressure on the regional electricity grid.

Without the price ceiling, the auction would have cleared at approximately $554.72 per MW/d. While capacity costs remain elevated, the ceiling is helping limit the extent to which those increases may ultimately affect consumers.

So, what do the results mean for customers across the region? Here are the key takeaways.

Who’s affected by the PJM Capacity Auction?

These auction results affect electricity customers throughout PJM’s 13-state territory, including homes, municipalities and businesses.

These costs are part of the regional electricity market, which means customers may be affected regardless of which company supplies their electricity. The timing and extent of the impact can vary depending on factors such as location, utility, energy contract, and usage profile.

What are capacity costs?

Capacity costs are one component of electricity supply pricing. They help ensure that enough power-generation resources will be available to serve the electric grid during periods of peak demand.

In simple terms, customers help pay for the power plants and other resources that must remain available when electricity usage is at its highest, such as during periods of extreme heat or cold.

Capacity payments are designed to support grid reliability by giving electricity generators an incentive to remain available in the future, even if those resources are not operating at full output every day.

Why are these capacity prices increasing?

The latest auction results reflect a growing imbalance between electricity demand and available power supply across the PJM market.

Electricity demand is growing

Demand forecasts have increased substantially, driven in part by the rapid development of data centers, continued advancements in artificial intelligence, and broader electrification across the economy.

As more facilities, technologies, and transportation systems rely on electricity, PJM must plan for higher levels of peak demand.

New electricity supply isn’t coming online quickly enough

At the same time, the region is facing constraints on the supply side.

Some existing power plants are retiring, while proposed generation projects can face long interconnection queues before they are able to connect to the grid. Together, these factors make it more difficult for available supply to keep pace with projected demand growth.

When demand rises faster than supply, capacity prices tend to increase.

How could these results affect your energy costs?

The capacity auction covers the June 2028 through May 2029 delivery year, so its results will not necessarily appear on customer bills immediately.

However, businesses and municipalities should begin preparing for the possibility of higher future electricity costs. The exact impact will depend on several factors, including an organization’s location, peak electricity demand, utility structure, and energy-supply agreement.

 

Capacity is also only one portion of a customer’s overall electricity expense. Wholesale electricity and generation costs often remain the largest component, making it important to evaluate energy expenses as a whole rather than focusing on a single market charge.

What businesses can do to prepare

Although individual customers cannot control the outcome of a capacity auction, they can take steps to better understand and manage the potential impact.

Update future energy budgets

Organizations should evaluate how higher capacity costs could affect upcoming energy budgets.

An account-level analysis can help produce a more accurate forecast based on current usage, contract structure, and anticipated market changes. Starting this process early can reduce the likelihood of unexpected expenses later.

Consider demand-management strategies

Because capacity obligations are often connected to electricity usage during periods of peak grid demand, businesses may be able to improve their position by managing when and how they use electricity.

Strategies may include:

• Demand-response participation
• Peak-load management
• Peak shaving
• Operational scheduling changes
• On-site generation or energy-storage solutions

  The right approach will depend on the organization’s facilities, operations, and tolerance for reducing or shifting electricity usage.

Continue managing wholesale electricity exposure

Wholesale electricity costs remain a major part of most commercial energy budgets.

Depending on an organization’s objectives and risk tolerance, it may be beneficial to explore strategies that provide greater control over wholesale market exposure. This could include managing a portion or all of the generation component through a structured procurement strategy.

Being proactive in a changing energy market

Capacity auctions are complex, but the message for energy customers is relatively straightforward: electricity demand is increasing, available supply remains constrained, and future costs may be higher.

The smartest response is to focus on the factors your organization can control. This means staying informed, evaluating future budget exposure, and developing a thoughtful wholesale electricity strategy.

IGS Energy will continue monitoring developments across the PJM market and identifying opportunities to help customers navigate the changing energy landscape. Businesses that want to better understand their potential exposure should connect with their energy advisor to discuss available products, strategies, and next steps.

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