PJM recently released the capacity auction results at the end of July for the period of June 2025 through May 2026, and the outcomes have been much higher than most anticipated. This surge in prices has had an immediate impact for pricing on new long-term electricity contracts within the PJM territory.
The latest auction saw capacity prices spike to $269.92/MW-day for the RTO zone of the June 2025 through May 2026 capacity period, while two other zones cleared even higher with Baltimore Gas and Electric (BGE) zone jumping to $466.35/MW-day and the Dominion zone jumping to $444.26/MW-day. Depending on an electricity consumer’s location on the zonal capacity price maps above, consumers will see these respective price escalations included in contracts if the term extends past May of 2025.
According to PJM, the spike in capacity prices was driven by several factors:
Power Plant Retirements
Some electricity generation plants have been shut down due to recent rules encouraging a transition from fossil fuel fired plants.
Increased Load
Load forecasts have increased due to the proliferation of AI and technology development, which consumes a lot of electricity, as well as recent rules forcing the electrification of buildings, appliances, and vehicles.
Market Reform
New market reforms aimed at better-reflecting risks from extreme weather. New market reforms designed to better reflect accreditation for each capacity resource’s contribution to reliability
The next PJM capacity auction is fast approaching and is scheduled for this December, since they are behind the normal schedule. The next auction will cover capacity prices for the period of June 2026 through May 2027. It remains to be seen if the price spikes of the recent auction will lead to any rule changes for the upcoming auction.
The recent PJM capacity auction results have changed the PJM energy landscape, with record-high prices that will have far-reaching implications for suppliers, consumers, and future utility rates. Therefore, deciding on the right product and pricing strategy while staying informed on this ever-evolving market will be crucial to managing one’s energy spend. Reach out today, so we can help you secure a contract strategy that best meets your needs!