Capacity Auction Results: What It Means for Your Business’s Electric Bill
The latest PJM capacity auction results are in.
On July 22, 2025, PJM released its capacity auction results for the June 2026 to May 2027 capacity year, which came in at a record-breaking $329.17/MW-day, reaching the cap of the collar established by PJM and approved by the Federal Energy Regulatory Commission (FERC). It’s important to note that the $325/MW-day cap communicated before the auction was an estimate based on earlier filings and formula variables that change each auction. By the time of the auction, updated market variables adjusted the cap to $329.17/MW-day.
For context, the 2025 to 2026 clearing price was $269.92/MW-day for most of the PJM footprint.
This outcome leaves consumers across a large region of the U.S. facing significantly higher electricity costs. And if your company operates in the PJM market, these results will directly impact your energy budget.
Understanding what drove these record prices and how to prepare for the changes can help you protect your bottom line while maintaining operational efficiency.
Capacity charges explained
Capacity costs are charges that electric customers pay to ensure there is enough generation capacity available to meet peak demand. These costs help maintain a reliable power grid, ensuring that electricity is available even during periods of high demand.
Due to market conditions, capacity prices have hit all-time highs. These changes apply to every home, municipality, and business throughout the 13 states in the PJM market, regardless of who supplies your electricity.
Understanding the driving market forces
You may be wondering why prices are up across the PJM market. Three key factors converged to create this perfect storm of capacity pricing:
- Increased demand: Forecasts show rising electricity needs driven by data center expansion, artificial intelligence (AI) infrastructure growth, and continued electrification across the grid. These technology-driven demands are reshaping how much power the grid must be prepared to deliver during peak periods.
- Decreased supply: Power plant retirements continue to outpace new generation additions. Many facilities are shutting down due to age or diminished operating economics, reducing the overall capacity available to meet demand.
- New reliability rules: Updated regulations now factor in generators' fuel source reliability more heavily, which reduced the amount of capacity that generators could bid into the auction. This rule change aimed to improve grid reliability but also constrained available supply.
The impact of capacity charges — and what you can do
While no one can control capacity auctions, there are innovative products and services that can help commercial energy customers manage their peak demand and expenses to prepare for budget changes in the future.
- Budget and impact awareness: At IGS Energy, we can analyze your accounts to provide an updated, accurate budget that reflects these upcoming capacity changes, so your team knows how to plan and react.
- Demand strategies: Our team of experts can deliver strategies like demand response and peak shaving to reduce your obligation and improve your overall position.
- Wholesale electricity costs: Wholesale electricity/generation is still the largest part of your energy expense — especially with recent changes — and remains a top focus. Controlling this component, in part or in full, is critical.
Lean on your trusted energy partner — and move forward with confidence
The result of this summer’s auction underscores the importance of having a trusted energy partner who monitors market developments and provides actionable guidance. It also highlights opportunities for businesses that act strategically. By understanding these changes and implementing appropriate responses, you can minimize the impact while positioning your company for long-term energy cost stability.
While this auction outcome affects everyone in the PJM market and can be stressful to navigate, having a trusted energy partner makes it easier to manage the challenges of a volatile market. Staying educated and proactive about what you can control is the smartest way forward — for both your operations and your peace of mind.