Independent guide. Based on PJM Interconnection public auction results, state PSC orders and FERC filings.Verified May 2026

PJM capacity auction 2026: why bills jumped 10-25 percent in 13 states

PJM's July 2024 capacity auction cleared at $269.92 per MW-day, nearly 10x the prior year's $28.92. The result has flowed through to residential bills across PJM's 13-state territory in 2025 and 2026 as a $15 to $45 monthly bill increase. This page explains the auction, the data-center demand driver, the state-by-state pass-through, and the outlook for the 2025 BRA.

2024 BRA clearing price

$269.92

per MW-day, 2025-2026 delivery

Prior year

$28.92

per MW-day, 2024-2025 delivery

Multiple

9.3x

year-over-year jump

What the capacity market actually does

PJM operates a separate market for generation capacity, distinct from the energy market that prices kWh in real time. The capacity market pays generators to be available during PJM's peak demand hours, even if they do not produce energy in most of those hours. The rationale: building and maintaining a generating plant has fixed costs that are not recovered by selling energy alone in low-price hours; the capacity payment fills the gap so generators can stay in business.

PJM holds an annual Base Residual Auction (BRA) about three years before the delivery year. Generators bid the lowest price they will accept to be available; PJM accepts bids until it has bought enough capacity to meet forecast peak demand plus a reserve margin (currently about 15 percent). The auction clears at the price needed to incentivise the marginal generator; that clearing price applies to all winning bids and is passed through to retail customers as a separate capacity charge.

Why the 2024 BRA spiked

The 2024 BRA outcome surprised most market participants. Three factors combined. First, PJM raised its load forecast meaningfully versus prior years, primarily reflecting projected data-center electricity demand growth in Northern Virginia and other regions. The Loudoun County data center cluster (about 70 percent of US internet traffic) plus new AI training workloads expanded the forecast peak by several gigawatts. Second, coal plant retirements continued (about 5 GW of PJM coal capacity retired between the 2023 and 2024 BRAs), and the replacement gas and renewable generation is slower to come online due to interconnection queue delays.

Third, the BRA design includes a downward-sloping demand curve that pays higher prices as the reserve margin tightens, and the 2024 auction cleared on the steep portion of that curve. Smaller changes in supply or demand could have produced much larger price changes. The combination tipped the auction from the prior year's near-floor pricing to near-cap pricing in a single auction cycle.

State-by-state residential bill impact

The capacity-charge pass-through varies by zone because PJM's market is divided into Locational Deliverability Areas (LDAs) with separate clearing prices reflecting transmission constraints. The hardest-hit zones in the 2024 BRA were the BGE zone (Maryland, $466.35 per MW-day), the EMAAC zone covering parts of NJ and PA ($269.92), and the Rest of RTO zone ($269.92). Estimated residential bill impacts for the 2025-2026 delivery year:

Maryland (BGE customers): $30 to $45 per month incremental on typical residential bill
New Jersey (JCP&L, PSE&G): $20 to $35 per month
Illinois (ComEd zone): $20 to $30 per month
Pennsylvania (PECO, FirstEnergy): $15 to $30 per month
Ohio (AEP, FirstEnergy, Duke, AES): $15 to $30 per month
Virginia and West Virginia: $10 to $25 per month
Delaware, DC: $15 to $30 per month

The dollar impact compounds for higher-usage households (larger homes, electric heating) because the capacity charge is roughly proportional to peak-coincident load. Households on managed-charging programs, smart-thermostat demand-response, and behind-the-meter battery can reduce their capacity-charge contribution by 10 to 30 percent depending on event participation.

Data centers and the load-growth problem

US data center electricity demand was about 200 TWh in 2024 (about 4 percent of national consumption). Most projections expect 700 to 1,000 TWh by 2030, depending on AI training intensity. PJM's footprint includes about half of US data center capacity, so PJM faces a particularly steep load-growth trajectory. The new load is sticky (data centers run 24/7 at high capacity factor), high-margin (utilities earn meaningful revenue per kWh), and locationally concentrated (Loudoun County, Phoenix-equivalents nearby).

The capacity market has been the first to register the demand growth because capacity requirements scale with peak demand. Energy markets are catching up; wholesale energy prices in PJM rose by 30 to 50 percent in 2025 versus 2024, with further increases expected. The residential bill impact of energy-market changes flows through more slowly (most utilities hedge supply for a year or two) but is now starting to appear. The combination of capacity and energy increases means PJM-zone residential bills could rise 20 to 40 percent cumulatively over the 2025-2027 period.

Outlook for the 2025 BRA

The 2025 BRA, scheduled for July 2025, will set capacity prices for the 2026-2027 delivery year. Industry analysts expect prices to remain elevated and potentially rise further. The structural drivers (data center load growth, coal retirements, slow new-build) have not changed. FERC has approved some reforms to bring prices down: tighter capacity performance penalties, revised demand curve, and accelerated interconnection of new generation. These will help over a 2 to 4 year horizon but will not produce immediate relief.

For PJM-zone residential customers, the practical implication is that the 2025-2026 bill increases are not transient. They reflect a structural shift in the supply-demand balance that will take several years to resolve. Households should plan for elevated bills through at least 2027 and consider efficiency investments (smart thermostat, heat pump conversion, LED retrofit, panel optimisation for any electrification) to offset some of the rate increase. Demand-response enrollment can reduce the capacity-charge component meaningfully for engaged households.

Sources and further reading

FAQ

What is the PJM capacity auction?

PJM Interconnection runs an annual Base Residual Auction (BRA) where it buys electricity generation capacity for delivery 3 years forward. Generators bid the lowest price they will accept to be available; the auction clears at the price needed to meet PJM's forecast peak demand plus reserve margin. The clearing price applies to all winning bids and is passed through to retail customers as a separate capacity charge component on the bill.

What happened in the 2024 BRA?

The July 2024 BRA cleared at $269.92 per MW-day for the 2025-2026 delivery year, up nearly 10x from the prior year's $28.92 per MW-day. The price spike reflected new data center demand growth (especially in Northern Virginia), coal-plant retirements ahead of new generation coming online, and tightened reserve margins. The result: residential electricity bills in PJM states are projected to increase 10 to 25 percent in 2025 and 2026 due to capacity-charge pass-through.

Which states are affected?

PJM covers all or part of 13 states plus DC: Delaware, Illinois (ComEd zone), Indiana (small portion), Kentucky (small portion), Maryland, Michigan (small portion), New Jersey, North Carolina (small portion), Ohio, Pennsylvania, Tennessee (small portion), Virginia, West Virginia, plus DC. The capacity-charge impact varies by zone; the worst-hit zones are the BGE zone in Maryland, AEP and FirstEnergy zones in Ohio, ComEd in Illinois, and DPL in Delaware. Per-customer monthly bill impact: $15 to $45 incremental.

Why are data centers blamed?

Northern Virginia hosts the largest concentration of internet data centers in the world (about 70 percent of US internet traffic flows through Loudoun County). Data center electricity demand has grown 20 percent per year and is forecast to continue growing as AI training workloads expand. PJM forecasts data center load as a key driver of the next decade's peak demand growth; the 2024 BRA cleared at the higher price because PJM bought 11 percent more capacity than the prior year, much of it to serve this load growth.

Can residential customers avoid the capacity charge?

Mostly no. The capacity charge applies to all customers in proportion to their peak-coincident load (a measure of how much they contributed to PJM's annual peak hour). Some utilities offer demand-response programs that pay customers to reduce load during PJM-called events, which can offset some of the capacity charge. Smart-thermostat enrollment in PJM's Curtailment Service Provider programs can reduce a household's capacity-charge contribution by 10 to 30 percent depending on event participation.

Will the 2025 BRA be even worse?

Possibly. The 2025 BRA (for 2026-2027 delivery year) runs in July 2025 and will set capacity prices for the 2026-2027 delivery year. Industry analysts expect prices to stay elevated and possibly rise further given continued data center growth, ongoing coal retirements, and slow progress on new gas and renewable generation. FERC has approved some reforms intended to bring prices down (capacity market changes, demand-curve adjustments) but the structural supply-demand tightness will not be fixed in one auction.

Does the capacity charge appear separately on my bill?

It varies by utility. Some utilities (ComEd, PPL) break out the capacity charge as a separate line item on the bill, making the pass-through transparent. Others (BGE, FirstEnergy) bundle it into the energy or supply charge. Customers can verify by comparing their per-kWh rate year-over-year; if the rate jumped 10 to 25 percent in 2025-2026, most of the increase is capacity pass-through from the 2024 BRA. The utility's rate-case filings with the state PSC document the breakdown.

Disclaimer. Capacity auction clearing prices are public per PJM's auction reports. State-by-state residential bill impact estimates are based on PJM zone pricing applied to typical residential load profiles; exact impact varies by utility, rate class and household usage. Independent resource.