PJM Extends $325/MW-day Capacity Price Cap Through 2030 — $45 Billion in Projected Consumer Savings
PJM Interconnection has agreed to extend its $325/MW-day capacity price cap for an additional two years, now running through 2030. The extension, pushed by Pennsylvania Governor Josh Shapiro following his landmark FERC complaint in December 2024, is projected to save PJM's 67 million customers across 13 states a cumulative $45 billion. A $175/MW-day floor is maintained to ensure generator revenue viability.
Executive Impact — C&I Buyers
- →Budget Certainty: With the cap locked through 2030, capacity costs in future auctions cannot exceed $325/MW-day. This provides a firm ceiling for 4+ years of commercial procurement planning.
- →Contract Strategy: Knowing the cap exists, buyers should pursue long-term fixed-price supply contracts that lock in today's all-in rates — since the capacity component is now bounded through 2030.
- →Demand Response Still Valuable: Even with the cap, DR participants still earn the full clearing price. At $325/MW-day, a 1 MW curtailment commitment earns approximately $118,000/year in gross revenue.
How We Got Here: The Shapiro Settlement
In December 2024, Pennsylvania Governor Josh Shapiro filed a complaint with the Federal Energy Regulatory Commission (FERC) challenging PJM's auction design. His argument: the July 2024 capacity auction had produced runaway prices that would cost consumers billions in unnecessary charges, driven by structural market flaws rather than genuine supply scarcity.
In January 2025, a settlement was reached between PJM and the Shapiro administration establishing a price collar: a $325/MW-day cap and $175/MW-day floor for the 2026/2027 and 2027/2028 delivery years. FERC approved the proposal in April 2025.
In February 2026, following continued advocacy from the Governor's office, PJM agreed to extend this collar for two additional delivery years — pushing the cap through 2030.
The Numbers: What the Cap Actually Prevents
To understand the impact, consider: the 2026/2027 capacity auction cleared at $329.17/MW-day — a 22% increase over the initial record-breaking results. Without the administrative cap, market dynamics suggest prices could have cleared significantly higher, potentially approaching the $466/MW-day level seen in constrained zones like BGE and Dominion.
| Scenario | Capacity Price | Annual Cost (10 MW facility) |
|---|---|---|
| With Cap ($325/MW-day) | $325/MW-day | ~$1.19M |
| Without Cap (constrained zone) | $466/MW-day | ~$1.70M |
| Savings per facility | $141/MW-day | ~$515K/year |
The Generator Perspective: Floor Protects Investment
The $175/MW-day floor ensures that generators receive minimum compensation for keeping capacity available. This is critical for incentivizing new generation construction and preventing the premature retirement of existing dispatchable plants — which itself was a primary driver of the capacity shortage that caused prices to spike in the first place.
The collar creates a bounded market: prices can fluctuate with fundamentals, but within a range that protects both consumers (from runaway costs) and generators (from inadequate revenue).
What This Means for Your Procurement Strategy
With capacity costs now bounded through 2030, commercial energy buyers in PJM territory have an unusually clear planning horizon. Here's how to leverage it:
- Lock in long-term fixed rates now. With capacity bounded at $325/MW-day, the supply component of your electricity cost is the primary remaining variable. Current wholesale energy prices remain favorable — locking in a 3-5 year contract captures both the capacity ceiling and today's energy market.
- Maximize Demand Response participation. At $325/MW-day, DR revenue remains compelling: approximately $118,000/year per MW of curtailable load. If your facility can participate, the 2027-2030 window is guaranteed at this floor.
- Review PLC management. Your Peak Load Contribution (PLC) determines how much capacity cost flows to your bill. Summer 2026 is the PLC-setting period for the 2027/2028 delivery year. Curtailing during the top 5 peak hours can save hundreds of thousands per facility.
Related Analysis
For full details on the original auction results that triggered this cap, see our analysis: PJM Capacity Prices Surge 833% to Record $269.92/MW-day. For the 2027/2028 look-ahead, see PJM 2027/2028 Capacity Auction Preview.
Source: PJM Interconnection, Office of PA Governor Josh Shapiro, Federal Energy Regulatory Commission (FERC).