PJM Capacity Auction Hits Price Cap for Third Consecutive Time

PJM, the grid operator serving 67 million customers across the Mid-Atlantic and parts of the Midwest, just ran its yearly auction that sets electricity capacity prices for 2028-2029. For the third year running, prices hit the maximum allowed cap. That's the ceiling put in place last April, when a group of state governors negotiated a two-year price limit to try to soften the blow. Even with that cap, costs keep climbing: one independent analysis found PJM customers' total capacity costs jumped from $2.2 billion in 2024 to $14.7 billion the following year, an increase of $12.5 billion.

Much of the power secured in this auction will come from fossil fuels rather than cheaper renewables — 46 percent from gas and 18 percent from coal, adding up to 64 percent fossil generation. Critics point to rising electricity demand from data centers as a major driver of these costs. PJM plans a separate "backstop" auction in September aimed at securing power specifically for large energy users like data centers, though it would run under different rules and a different price cap than the regular auction.

For homeowners in the PJM region — which spans states including Pennsylvania, Ohio, Virginia, Maryland, New Jersey, and others — this points toward continued upward pressure on electricity bills in the coming years, separate from anything happening at your own house. It's a reminder that home upgrades like better insulation or a heat pump can help offset rising utility costs by cutting how much power your house actually uses.