Every year, PJM, the grid operator serving 65+ million people across 13 states, runs a capacity auction. These auctions don’t set your hourly energy price; they secure commitments from resources to be available when demand peaks, functioning like reliability insurance for the grid. The results form a major part of wholesale costs and ultimately influence business electricity bills.
Context from last year:
The 2025/26 auction was a wake-up call: prices jumped from under $30 to $269.92/MW-day across most of PJM, with localized stress pushing BGE as high as $466.35 and Dominion to $444.26. Total capacity costs rose to about $14.7 billion from just over $2 billion the year before, driven by tighter supply–demand fundamentals as retirements grew and load forecasts rose.
This year’s result:
The 2026/27 auction cleared at $329.17/MW-day UCAP (Unforced Capacity) the maximum allowed under PJM’s current rules, and the highest-level PJM has recorded. All zones, including historically higher-priced areas like BGE and Dominion, cleared at the same price. PJM procured 146,243.8 MW of capacity, slightly above its reliability target, with total auction value at $16.1B (up ~9.5% year over year).
Why a single clearing price across PJM?
PJM applied safeguards, including Market Power Mitigation (a rule that stops power suppliers from overcharging when the market is tight), which capped generator offers at a reasonable level. Together with the temporary cap-and-floor rules designed to prevent extreme price swings, this resulted in a uniform clearing price of $329 per MW-day across all zones. PJM noted that without these protections, prices could have climbed as high as $388.57 per MW-day.
What moved the market:
Overall supply into the auction dipped slightly compared to last year, highlighting the ongoing tight balance between demand growth and available resources. While 2,669 MW of new or uprated generation did participate, it wasn’t enough to offset broader market pressures. Importantly, this was the first auction where energy efficiency projects, like LED lighting or HVAC upgrades, were excluded as eligible capacity, placing more weight on traditional generation, storage, and demand response. At the same time, demand response participation declined, further limiting flexible options that can help relieve peak stress. Imports and renewable resources increased modestly, but not at a scale large enough to ease overall pricing pressure.
Customer impact and timing:
Consumers are already feeling the impact of the 2025/26 auction, when prices jumped nearly tenfold to $269.92/MW-day. Now, the 2026/27 auction has set prices even higher at $329.17/MW-day, which will flow into retail supply beginning in June 2026. For many commercial and industrial consumers, that means bills could rise an additional 1.5%–5%, depending on how suppliers and regulators pass through the costs.
A simple way to picture this is as a pie representing the capacity costs: your share of the pie stays the same, but when the pie itself grows, your slice costs more. For example, a slice worth $10 today could cost $12 the next, even if the portion size remains the same.
What You Can Do:
Rising capacity costs will influence electricity prices beginning in June 2026, but you don’t need to navigate these changes alone. The team at Sunlight Energy Group specializes in helping businesses like yours stay ahead of market shifts. Proactive planning now can help you manage higher costs later. Reach out to Sunlight Energy Group today and let us do the heavy lifting to secure the best strategy for your energy future.
