Electricity costs across the PJM region, which spans 13 states from Illinois to New Jersey, are on the rise again. The latest capacity auction results confirm what energy experts have been warning for months: higher power prices are here to stay.
In PJM’s most recent auction for the 2027/2028 delivery year, capacity prices reached $333.44 per megawatt per day, setting a new record high and marking the third straight year of historic increases. To put that in perspective, just two years ago capacity prices were $28.92 per megawatt per day, an 800% increase that has already pushed many businesses’ electric bills up 20 to 30 percent.
While Pennsylvania Governor Josh Shapiro’s temporary price cap helped prevent an even sharper spike, with analysts estimating prices could have cleared over $500 per megawatt per day without it, the reality is that this new level of pricing is not an outlier. It is the new normal.
The capacity market is designed to ensure the electric grid has enough standby power to meet peak demand, the moments when usage surges such as during extreme weather or high industrial activity.
A helpful analogy:
Think of the grid like a shopping mall parking lot. Most of the year, the lot sits half empty. But on days like Black Friday or Christmas Eve, every space is full. The mall must pay for and maintain that large parking lot all year long, not for everyday use but to make sure there is enough room when everyone shows up at once.
The same concept applies to capacity. Businesses are effectively paying for the grid’s ability to deliver electricity during those few critical hours of peak demand, even if they do not use that much energy throughout the year.
This year’s record prices reflect several challenges converging at once:
Together, these factors have tightened the energy supply, driving up costs and putting additional pressure on utilities, suppliers, and end users.
For most commercial and industrial customers, capacity costs make up roughly 20–30% of the total electricity supply rate. So when capacity prices rise dramatically, overall electricity bills follow suit.
While this year’s auction increase from $329.17 to $333.44 is relatively modest, it builds on multiple years of substantial hikes, meaning businesses are unlikely to see relief anytime soon. The cap Governor Shapiro helped implement softened the impact for now, but analysts warn that without structural reforms, these higher costs will continue through future delivery years.
At Titan Energy, we understand that rising capacity prices can have a major impact on your bottom line. Our team works with organizations throughout the PJM footprint, from Pennsylvania and Maryland to Ohio and Illinois, to manage and mitigate the effects of volatile market conditions.
Here’s how we can help:
We monitor capacity trends and auction outcomes closely, helping clients lock in supply agreements at the right time before market spikes impact budgets. With data-driven forecasting and strong supplier relationships, Titan Energy helps you make informed purchasing decisions based on real-time market intelligence.
Because capacity costs are based on your organization’s peak demand, reducing usage during those few critical hours each year can significantly lower your capacity charges. Titan Energy helps clients implement peak shaving and demand response strategies to minimize those costly peaks, often leading to double-digit savings.
Adding renewable generation or distributed energy solutions can provide insulation from capacity and market fluctuations. Titan Energy helps assess the ROI of onsite solar, storage, and other sustainability measures that can reduce grid dependence and long-term costs.
With capacity prices now projected to remain elevated, long-term energy planning is more important than ever. Titan Energy provides tailored budget forecasts and risk management strategies that give your business financial visibility and stability, even in volatile markets.
The PJM market is entering a new era of higher capacity and reliability costs — driven by surging demand, infrastructure constraints, and evolving grid dynamics. While the temporary cap has helped temper extreme spikes, businesses should prepare for sustained increases over the next several years.
Titan Energy can help you navigate this new energy landscape with confidence. Our experts analyze your energy usage, forecast cost exposure, and build a strategy designed to reduce risk, optimize spend, and uncover opportunities for efficiency.
Because while the “parking lot” is getting more expensive, how and when you use it can still make all the difference.