PJM Capacity Increases Start June 2025

Consumers in PJM will start to feel the impact of the steep capacity price increases in June; the next auction is also looking challenging despite the new cap and floor rules.

PJM Interconnection LLC (PJM) operates the electricity transmission system or grid for all or part of 13 states and the District of Columbia (DC). PJM is the independent system operator ISO and regional transmission organization (RTO) for the area.

In July 2024, PJM conducted its annual capacity auction for the 2025/26 delivery year. The action resulted in a steep increase for a majority of the region to $269.92 per MW/day from $28.92 per MW/day. Prices hit zonal caps of $466.35 per MW/day for Baltimore Gas and Electric in Maryland and $444.26 per MW/day for Dominion zones in Virginia and North Carolina.

The increases were primarily due to: regional power plant retirements, increased load, and new market rules. In December 2024, Governor Josh Shapiro of Pennsylvania filed a complaint at the Federal Energy Regulatory Commission (FERC). Governor Shapiro, along with other governors in the region, was concerned about the impact of electricity price increases in the area.

In April 2025, FERC approved a PJM proposal to set a price cap and floor for the next two delivery years, 2026/27 and 2027/28. Under the new rules, PJM capacity prices will be capped at $325 per MW/day and a floor set at $175 per MW/day.

The new rules will not help consumers for the 2025/26 delivery year, who will experience significant increases in their electricity invoices. They will provide some help for the following two years, limiting further steep increases, but will continue to apply prices significantly above those from 2024/25 (i.e., $28.92 per MW/day).

Consumers with existing supply contracts and negotiating new supply contracts in the PJM market should consider these changes carefully and develop a plan to address the impact on their budgets.