PJM electricity prices are rewriting industrial budgets
Capacity, the charge for being able to draw power at the system peak, is now one of the largest drivers of industrial electricity cost in the 13-state PJM region. Before changing suppliers or budgets, find out which parts of your bill are market costs and which are errors.
What happened to capacity prices
| Delivery year | RTO clearing price ($/MW-day) |
|---|---|
| 2024/25 | $28.92 |
| 2025/26 | $269.92 |
| 2026/27 | $329.17 |
| 2027/28 | $333.44 |
| 2028/29 | $325.00 |
Source: PJM Base Residual Auction reports; Utility Dive. 2026/27 is about 22% above 2025/26 and about 1,038% above 2024/25.
For 2028/29, PJM procured about 138,318 MW, roughly 6,831 MW short of its reliability requirement. Its own simulation without the price cap put the clearing price near $554.72 per MW-day. The market monitor attributed about $6.3 billion, 38% of that auction's $16.4 billion value, to data center load.
Why it hits industrial sites hard
Capacity pays for availability at the peak, not for energy consumed. A 10 MW peak load contribution at $329.17 per MW-day is about $1.2 million a year in capacity alone. Retirements, data-center growth and slow interconnection are tightening supply and raising demand at the same time.
The headline price is not your bill
Load zone, rate class, load shape, contract structure, tariffs and billing determinants all shape what a facility pays. Two plants in the same zone can face very different exposure.
What to do, in order
- Audit first. Verify rate class, capacity treatment, riders, demand ratchets, meter multipliers and each account's peak load contribution (capacity tag), and recover any errors. At $329.17 per MW-day, every 1 MW of tag is roughly $120,000 a year at the auction rate.
- Read the contract. Find out whether capacity and transmission are fixed or passed through.
- Then decide: buy, wait or hedge. Time purchases to market conditions and delivery-year exposure, not only to contract expiry.
- Cut next summer's peak. Load reduced during likely PJM peak hours lowers future tags; a demand-response provider can also pay for flexibility.
- Consolidate data across sites so exposure is visible by zone and facility.
In a market where unavoidable costs are rising, removing the avoidable ones matters more.