PJM Interconnection, a key player in the management of electricity movement across thirteen states, has announced significant energy price increases set to take effect in June 1, 2025. This change comes as a result of the 2025-2026 capacity auction results, impacting regions such as New Jersey, Pennsylvania, Ohio, and others. Consumers, particularly businesses, should brace for a noticeable increase in utility pass-through rates starting mid-2025.

Understanding PJM Interconnection and Its Role

PJM Interconnection is responsible for overseeing the electricity grid and ensuring a reliable supply of energy across a vast region. Each year, PJM conducts capacity auctions to secure enough energy resources to meet the anticipated electricity demand for the upcoming year. These auctions play a crucial role in adjusting energy capacity prices, which are determined by the need for new energy infrastructure development. Capacity charges, which are fixed rates set by local utility companies, typically account for about 25% of a business's monthly energy bill.

Why Are Energy Prices Increasing?

The recent announcements from PJM highlight a critical issue: the shutdown of power plants without the timely construction of new replacements. This has led to a decreased supply of energy, prompting PJM to increase capacity charges by a staggering 833% starting in June 2025. While this increase is significant, businesses have a window of opportunity to optimize their energy strategies before these changes take effect.

Who Will Be Affected by PJM’s Capacity Auction Results?

Businesses and households across PJM's extensive service area will feel the impact of increased capacity charges. PJM coordinates electricity movement throughout states including Ohio, Pennsylvania, West Virginia, Virginia, Washington D.C., New Jersey, Maryland, and Delaware. Additionally, PJM services specific areas of Illinois, Indiana, Kentucky, Tennessee, Michigan, and North Carolina. The widespread nature of PJM's service area means that a vast number of consumers will be affected by these changes.

How Will Capacity Auction Results Affect Business Energy Bills?

On July 30th, 2024, PJM completed its capacity auction, successfully securing the necessary energy resources to meet the 2025-2026 reliability requirements. However, achieving this capacity came at a cost. Charges increased from $28.92 per Megawatt (MW) daily in 2024-2025 to $269.92 per MW daily for 2025-2026. This represents an over 800% increase, which will inevitably be passed on to consumers. As a result, most businesses within PJM's service area can expect their commercial energy bills to rise by up to 29% starting in June 2025.

What Actions Can Businesses Take Now?

With an unavoidable rate increase on the horizon, businesses should consider securing a fixed-rate energy plan now. Even if your current energy contract is not set to expire for another 12-24 months, taking a proactive approach can help mitigate the effects of PJM's increase. Locking in a low, fixed rate with a long contract duration can provide cost stability as we navigate market increases in 2025 and beyond.

Optimizing Energy Strategies with Powerful Energy Consulting

At Powerful Energy Consulting, we understand the complexities of the energy market and are here to help businesses navigate these challenges with confidence. Our team of experienced commercial energy specialists is dedicated to providing personalized business energy consulting services that address each client's unique needs and challenges. By working with us, businesses can establish a forward-thinking energy strategy and lock in savings for years to come.

Take Control of Your Energy Costs with Powerful Energy Consulting

As PJM's capacity charges are set to increase significantly, now is the time for businesses to take control of their energy costs. By securing a fixed-rate energy plan and optimizing their energy strategy, businesses can protect themselves from market volatility and ensure cost stability. Don't wait until it's too late—contact Powerful Energy Consulting today at jaice@powerfulenergyconsulting.com to develop a customized energy strategy that aligns with your business goals.

To discuss how we can help you further, feel free to book a call with us at your convenience!