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PJM's capacity crunch reaches Pennsylvania electricity customers

PJM's capacity crunch reaches Pennsylvania electricity customers

Built World

Record wholesale prices flow through to retail bills as data center demand outpaces new generation

Yesterday: New supply rates hit Pennsylvania bills

Overview

Pennsylvania power bills jumped on June 1 as utilities passed through record wholesale prices set by PJM Interconnection, the grid operator for 67 million people across 13 states. PECO's commercial supply charge rose roughly 15 percent, with PPL Electric, Duquesne Light, and FirstEnergy's four Pennsylvania utilities also raising rates.

The increases trace back to PJM's last two capacity auctions, which cleared at record highs after data center demand outran new generation. Even with a price cap that Governor Josh Shapiro negotiated, total PJM capacity costs reached $16.4 billion for delivery in 2027 and 2028. That is more than seven times the bill from two years ago.

Why it matters

Data center growth has rewired the wholesale power market, and this month's electric bills now carry the cost for tens of millions of customers.

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Key Indicators

$329
Per MW-day capacity price
PJM's 2026/27 auction cleared at $329.17 per MW-day, hitting the FERC-approved cap.
94%
Share of PJM load growth from data centers through 2030
PJM's 2025 long-term forecast attributes almost all near-term peak load growth to data centers.
15%
PECO commercial supply rate jump on June 1, 2026
Commercial customers on PECO's General Service A rate saw one of the largest increases in the state.
$16.4B
Total PJM capacity costs for 2027/28
Up from $2.2 billion in the 2024/25 delivery year, before the data center surge hit the auctions.
67M
People served by PJM
PJM covers all or parts of 13 states and Washington, DC, the largest U.S. grid by population.

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People Involved

Josh Shapiro
Josh Shapiro
Negotiated price cap with PJM; pressing for further market changes

Organizations Involved

PJM Interconnection LLC
PJM Interconnection LLC
Regional grid operator
Running record-high capacity auctions while load growth outpaces new supply

PJM runs the wholesale electricity grid for 13 states and Washington, DC, covering about 67 million people.
Pennsylvania Public Utility Commission
Pennsylvania Public Utility Commission
State utility regulator
Approved June 1 rate changes; alerted consumers to higher summer bills

Pennsylvania's utility regulator approves the default supply rates that electric distribution companies charge customers without a competitive supplier.
PECO Energy Company
PECO Energy Company
Electric distribution utility
Passing PJM capacity costs through to about 1.7 million electric customers

PECO is the Exelon-owned electric and gas utility for the Philadelphia region.
Federal Energy Regulatory Commission (FERC)
Federal Energy Regulatory Commission (FERC)
Federal regulator
Approved Shapiro-PJM cap; weighing broader reforms

FERC oversees interstate wholesale electricity markets, including the PJM capacity auction.

Timeline

July 2024 June 2026

8 events Latest: Yesterday
Tap a bar to jump to that date

  1. New supply rates hit Pennsylvania bills

    Latest Market event

    Default supply rates rise at PECO, PPL, Duquesne Light, and FirstEnergy's four Pennsylvania utilities. PECO commercial customers face the largest jump at roughly 15 percent.

  2. PUC warns customers about summer bills

    Statement

    The Pennsylvania Public Utility Commission issues a consumer alert warning that supply rates will rise at every regulated utility on June 1 just as summer cooling demand picks up.

  3. PJM files data center rules at FERC

    Regulatory action

    PJM submits a compliance filing on how data centers with on-site generation can co-locate with the grid. The proposed rules target a July 31, 2026 effective date.

  4. Third record auction in a row

    Market event

    PJM's 2027/28 auction clears at $333.44 per MW-day. Total capacity costs reach $16.4 billion. PJM's market monitor reports that data centers account for 40 percent of the bill.

  5. Next auction clears at the cap

    Market event

    PJM's 2026/27 base residual auction clears at $329.17 per MW-day, the FERC-approved cap. Without the cap, PJM estimates the price would have been roughly $389.

  6. Price cap settlement approved

    Regulatory action

    FERC approves a settlement capping PJM capacity prices at $329.17 per MW-day for the 2026/27 and 2027/28 delivery years. PJM estimates the cap saves customers roughly $21 billion.

  7. Shapiro sues PJM at FERC

    Legal action

    Pennsylvania Governor Josh Shapiro files a complaint at FERC arguing that PJM's capacity auction design overcharges Pennsylvania customers by billions of dollars.

  8. PJM auction prices explode

    Market event

    PJM's 2025/26 capacity auction clears at $269.92 per MW-day, up roughly 800 percent from the prior year. Data center demand growth is the main driver.

Historical Context

2 moments from history that rhyme with this story — and how they unfolded.

June 2000 to September 2001

California electricity crisis (2000-2001)

Wholesale electricity prices in California spiked roughly tenfold in 2000 after a partially deregulated market collided with drought, tight supply, and market manipulation by Enron and others. Retail utilities PG&E and Southern California Edison were trapped between state-capped retail rates and runaway wholesale costs. PG&E filed for bankruptcy in April 2001, and Governor Gray Davis ordered rolling blackouts.

Then

California spent roughly $42 billion on emergency power purchases. Rolling blackouts hit cities, PG&E filed Chapter 11, and Davis signed long-term contracts at peak prices.

Now

FERC imposed price mitigation across western markets, and most states grew cautious about further deregulation. Davis was recalled in 2003.

Why this matters now

The mechanism rhymes with PJM in 2026: wholesale costs set by a regional market reach retail bills through state-level pass-throughs. Pennsylvania prices are nowhere near California 2001 levels, but the political logic is the same. Voters do not blame the grid operator. They blame their utility and their governor.

January 2014 to summer 2015

PJM polar vortex and Capacity Performance (2014-2015)

An Arctic outbreak in January 2014 pushed PJM winter demand to record levels. Roughly 22 percent of PJM's generation fleet went offline because of frozen equipment and fuel-supply problems. Wholesale spot prices hit $1,800 per MWh. PJM rewrote its capacity auction rules, creating Capacity Performance, a product that paid generators more to commit to delivering during emergencies.

Then

The 2018/19 capacity auction cleared at $164.77 per MW-day, roughly double pre-vortex levels. Costs flowed to customer bills across the PJM footprint.

Now

Capacity Performance pulled new gas plants into the queue and changed how generators bid into the auction. It set the template for the 2025/26 market reforms that helped produce today's record clearing prices.

Why this matters now

The 2014 cycle is the direct precedent for what is happening now. Stress reveals scarcity, PJM rewrites the rules, and prices flow through to customers. The difference is that 2014 was a weather event. The current shock is a structural demand shift driven by data centers, and it will not melt away with spring.

Sources

(8)
+2
Integrity Energy ElectricityRates.com Pennsylvania Public Utility Commission PJM Inside Lines Utility Dive Canary Media Institute for Energy Economics and Financial Analysis PJM Inside Lines