The PJM capacity auction cleared at $28.92 per megawatt-day in 2023. In 2024, that price jumped to $269.92. In 2025, it climbed again to $329.17.
That is not a typo. The wholesale market that powers Pennsylvania's grid has fundamentally repriced, and the increases are showing up on every electricity bill in the state.
What is the PJM capacity auction
PJM Interconnection runs the power grid for Pennsylvania and 12 neighboring states, serving roughly 65 million people. Every year, PJM holds a capacity auction to ensure enough power plants will be available to meet peak demand three years in the future.
The auction works like this: PJM forecasts how much electricity the region will need during peak summer heat waves. Power plant owners then bid to supply that capacity. The auction clears at a single price, and every generator that clears receives that price for being available, whether they actually run or not.
Utilities like PECO, PPL, and Duquesne Light are required to purchase capacity through this auction. They pass those costs directly to customers as part of the supply charge on your bill.
Capacity costs are distinct from energy costs. Energy is what you pay for the actual electricity you use. Capacity is what you pay for the infrastructure to be there when you need it. Both flow into the Price to Compare that determines your default rate.
For a deeper explanation of how Pennsylvania's deregulated market structures these costs, see our guide to Pennsylvania electricity deregulation.
How the 2024 auction broke records
The 2024 auction, which set prices for the 2025/2026 delivery year, cleared at $269.92 per megawatt-day. The prior year's auction had cleared at $28.92.
That represents an 833% increase in a single year.
PJM capacity auction clearing prices. The 2024 auction increased prices by 833%. Source: PJM Interconnection.
The auction ran in July 2024, but customers did not see the full impact immediately. Utilities phase in capacity cost increases across multiple billing periods. The first wave hit bills in June 2025. More increases arrived in December 2025. Additional adjustments are scheduled for June 2026 and December 2026.
For context: capacity auction prices had stayed relatively stable for years, hovering between $50 and $140 per megawatt-day throughout most of the 2010s. The sub-$30 price in 2023 was actually an outlier on the low end, driven by temporary oversupply conditions. But the swing to $270 caught analysts off guard.
The math translates roughly like this: every $100 increase in the capacity auction price adds approximately $10 to $15 per month to a typical household's bill, depending on usage patterns and how quickly the utility phases in the costs.
Why the 2025 auction went even higher
The 2025 auction, which set prices for the 2026/2027 delivery year, cleared at $329.17 per megawatt-day. That is a 22% increase over the already-record 2024 price.
Market conditions that drove the 2024 spike did not reverse. If anything, they intensified. Demand forecasts increased. Supply margins tightened further. The auction reflected those fundamentals.
Whether prices will continue rising in future auctions depends on how quickly new generation comes online relative to demand growth. The structural factors pushing prices higher have not yet been resolved.
What this means for Pennsylvania electricity bills
The capacity auction sets a floor under wholesale electricity costs. When that floor rises by 833%, the effect ripples through every utility's pricing.
Consider how the Price to Compare has moved:
PECO's current PTC is 11.024 cents per kWh through May 31, jumping to 11.572 cents in June. A year ago, it was below 10.5 cents.
PPL's current PTC is 12.953 cents per kWh, rising to 13.147 cents in June. Duquesne Light sits at 13.75 cents, increasing to 14.14 cents.
These quarterly PTC increases are not random fluctuations. They are the direct result of capacity costs flowing through the system.
At typical household usage of 850 kWh per month, a 2 cent per kWh increase in the supply rate adds roughly $17 per month to your bill, or about $200 per year. Households with higher usage, especially those running central air conditioning in summer, feel the impact more acutely.
The three drivers behind rising capacity prices
Coal plant retirements
Older coal-fired power plants have been shutting down faster than new generation has come online. Environmental regulations, unfavorable economics, and aging infrastructure have made many coal plants uneconomical to operate.
The grid now has less buffer capacity than it did five years ago. When PJM forecasts peak demand and fewer megawatts are available to bid into the auction, prices rise.
Data center growth
Electricity-hungry data centers have proliferated across the PJM region, particularly in Northern Virginia, which hosts some of the largest data center clusters in the world. These facilities run 24/7 and require massive amounts of power.
Data center developers have announced additional expansions, and PJM's demand forecasts now incorporate significantly higher load growth than historical trends would suggest. More anticipated demand means higher capacity prices.
Electrification trends
Electric vehicle adoption and heat pump installations are adding load to the grid. These technologies are more efficient than their fossil-fuel counterparts, but they shift energy consumption onto the electric grid.
The growth is still modest in absolute terms, but it contributes to higher peak demand forecasts. Combined with supply constraints from plant retirements, even incremental demand increases put upward pressure on auction prices.
What is being done about it
Governor Josh Shapiro filed a complaint with the Federal Energy Regulatory Commission (FERC) arguing that the auction process produced unjust and unreasonable rates. His administration reached an agreement with PJM to cap future capacity prices.
The agreement projects $4 billion in savings for Pennsylvania ratepayers through 2028. Those savings come from lower clearing prices in future auctions, not from reversing prices that have already been set.
The current rates, set by the 2024 and 2025 auctions, are locked in. Customers in Met-Ed and Penelec territories are already paying bills that reflect these auction results. The Shapiro agreement may prevent further spikes, but it does not roll back the increases that have already occurred.
Relief, to the extent it materializes, will show up in future delivery years. Bills in 2026 and 2027 will still reflect the record-high auction results.
How Pennsylvania customers can offset rising rates
The capacity auction sets the wholesale floor, but retail competition still exists. Customers in deregulated territories can shop for supplier plans priced below the utility's Price to Compare.
The PTC is your benchmark. Any supplier rate below it saves money on the supply portion of your bill. With PTCs rising across all seven major Pennsylvania utilities, the gap between default rates and competitive offers can be substantial.
Check current rates in your territory:
- PECO (southeastern PA, including Philadelphia)
- PPL (Lehigh Valley, central PA)
- Penn Power and West Penn Power (western PA)
Locking in a fixed rate below the current PTC insulates you from quarterly increases for the duration of the contract. The switching process takes about five minutes and costs nothing.
For step-by-step instructions, see our guide to switching suppliers in Pennsylvania. To browse available plans, visit our Pennsylvania electricity rates page.
FAQ
What is PJM Interconnection?
PJM Interconnection is the regional transmission organization that manages the electric grid across 13 states and the District of Columbia, serving approximately 65 million people. PJM coordinates the movement of wholesale electricity, operates the capacity auction, and ensures grid reliability for Pennsylvania and neighboring states.
Why did capacity prices spike in 2024?
Capacity prices increased 833% due to tighter supply margins meeting higher demand forecasts. Coal plant retirements reduced available generation, while data center growth and electrification trends increased projected peak demand. The auction price reflects the balance between supply and demand for grid reliability.
Is the Shapiro agreement enough to reverse rate increases?
The agreement caps future capacity prices and projects $4 billion in savings through 2028. However, it applies to future auctions. The 2024 and 2025 auction results are already locked in. Current bills reflect those record prices, and the agreement does not roll them back.
How can I lower my Pennsylvania electricity bill?
Shop for a supplier plan priced below your utility's Price to Compare. The PTC is your benchmark for savings. Fixed-rate plans below the PTC save money immediately and protect against future quarterly increases. Switching is free and takes about five minutes.
When will electricity rates go down?
Future auction results may be lower if the Shapiro agreement's price caps take effect and if new generation comes online to ease supply constraints. However, the structural drivers of higher prices, including plant retirements and demand growth, remain. Rates may stabilize, but a return to pre-2024 levels is unlikely in the near term. Locking in a competitive fixed rate now provides more certainty than waiting for market conditions to improve.