PJM capacity prices hit price cap, reserve shortfall grows

The grid operator that manages electricity supply across 13 Mid-Atlantic and Midwestern states plus Washington, D.C. — called PJM Interconnection — just ran its yearly auction to line up power supply for 2028-2029. Prices hit the maximum allowed, $325 per megawatt-day, across the whole region. That cap kept prices from spiking even higher: without it, prices would have been much steeper, especially in northern Illinois.

Despite the high prices, very little new power supply showed up to bid, and the amount of "demand response" — homes and businesses agreeing to cut electricity use at peak times in exchange for payment — actually fell. PJM is now about 6.8 gigawatts short of its target reserve margin, an increase from the last auction. Part of the strain comes from rising electricity demand tied to data center construction in the region.

For most households, this auction shouldn't change your electric bill much right away, since prices came in close to last time's. Large industrial customers are seeing far bigger cost increases than a few years ago, and that gap is expected to continue. Regulators, utilities, and industry groups are now debating changes to how PJM buys power and how data centers are charged, which could affect electricity costs and reliability in the region over the next few years. If you live in a PJM state, it's worth keeping an eye on how these reforms play out, since they'll shape future rates.