PJM Capacity Prices Surge 833% to Record $269.92/MW-day
The PJM 2026/2027 Base Residual Auction (BRA) has cleared at $269.92/MW-day for most of the RTO, representing an 833% increase over the previous year's $28.92/MW-day. In constrained zones like Dominion and BGE, prices hit the administrative cap of $466.35/MW-day. This massive hike is driven by a "perfect storm" of coal/gas plant retirements, surging data center load, and tighter reliability modeling. For commercial businesses, this translates to a roughly $0.02 - $0.04/kWh increase in all-in electricity costs starting June 2026.
Why Did Prices Explode?
The 2026/2027 auction is the first to fully reflect PJM's new reliability modeling to account for extreme weather risk (Winter Storm Uri fallout) and higher load forecasts. Three main factors drove the 9x price multiplier:
- Supply Crunch: Over 6,000 MW of fossil fuel generation retired, while new renewable entry has been slower than expected due to interconnection backlog.
- Demand Surge: PJM forecasted a peak load increase of nearly 4,000 MW, driven largely by new data center connections in Northern Virginia and Ohio.
- Risk Modeling: New "Effective Load Carrying Capability" (ELCC) rules de-rated the capacity value of gas and renewables, meaning more installed MWs are needed to count for the same reliability.
Impact on Commercial Buyers
Capacity costs are a pass-through component in most energy contracts. Even if you have a "Fixed All-In" rate, your supplier likely included a "Regulatory Change" or "Capacity Change" clause allowing them to adjust for this magnitude of increase.
Budget Warning
A typical manufacturing facility using 10,000 MWh/year could see annual costs rise by $200,000 - $400,000 purely from this capacity component. This cost is determined by your "PLC" (Peak Load Contribution) – your usage during the 5 highest grid-peak hours of summer 2025.
The Silver Lining: Demand Response Revenue
While this price hike hurts budgets, it massively increases the value of Demand Response (DR). Since DR participants are paid the capacity clearing price, the revenue potential for curtailing load has significantly increased.
For the 2026/2027 delivery year, a business that can curtail 1 MW of load can earn approximately $100,000 - $120,000 in gross revenue, compared to just $10,000 in previous years.