PJM’s old way of getting power built isn’t working. Has it found a fix?

If you live in the PJM grid region, which covers 67 million people from Virginia to Illinois, this news helps explain why your electric bill may be climbing. PJM runs regular auctions to line up enough power plants for hot summers and cold winters. Its latest auction hit the price cap of $325 per megawatt-day for the third time in a row, pushing total capacity costs to $16.4 billion, tying last December's record. Even at that price, the auction still fell short of PJM's reliability goal by over 6.8 gigawatts. Customers in Illinois, New Jersey, and Pennsylvania are already seeing bills rise more than 10 percent, and PJM's own market monitor says data centers are responsible for more than $29 billion in added capacity costs since 2024.

PJM's fix is a new auction, called a reliability backstop procurement, meant to make data centers pay directly for the new power plants and batteries their huge electricity use requires, rather than spreading those costs across all customers. It would use 15-year contracts and a higher price cap, $555 per megawatt-day, to give developers enough certainty to build. This needs approval from federal regulators, with the first auction planned for September.

Whether this actually protects ordinary customers is still unsettled. Advocates warn that unless states make sure data centers, not utility shareholders or general ratepayers, cover these costs, everyday customers could still end up paying for capacity built to serve data centers.