PJM Capacity Auction Ends with Record-High Costs, Again

Valley Forge, PA - Today, the nation's largest grid operator PJM heldits capacity auction for the 2027/2028 Delivery Year. The auction ended when prices reached the price cap despite failing to procure enough capacity to meet the one-event-in-10-years reliability standard of a 20% reserve margin. PJM only managed to procure a 14.8% reserve margin.

PJM covers 65 million customers across 13 states and D.C.-all of whom have been paying record-high energy prices for years due to PJM's poor planning and rapidly-increasing demand from data centers. The last capacity auction in June also cleared at the rate ceiling, marking a 22 percentincrease from 2025. This price spike in the auction could lead to energy bills rising from 1.5 to 5 percent for PJM's customers.

In April, Governor Josh Shapiro, in partnership with a coalition of advocates that included Sierra Club, negotiated a price ceiling for the next two capacity auctions. Today is the last auction that will have the price ceiling in place.

Recent analysisfrom Gridlab demonstrated that ratepayers in the footprint could have saved $3.5 billion if the gigawatts of clean energy in the PJM interconnection queue had gotten interconnection agreements and come online. Despite PJM's recent attempts to address queue backlogs, concern remains that insufficient clean, affordable generation is coming online quickly enough to meaningfully protect consumers from the uneconomic cost of fossil generation.

In response, Sierra Club Senior Advisor Jessi Eidbo issued the following statement:

"It's little surprise that this capacity auction also hit the auction ceiling and ended with record-high prices for customers. We were fortunate to have the price collar in place, but this is the last auction with these guardrails, creating serious concern over next year's auctions. As we approach the holiday season, families should be spending their hard-earned dollars on family meals and presents for each other, not forking more money over to the utility companies and Big Tech's power needs.

"These skyrocketing prices are preventable. PJM should be doing everything in their power to lower prices for their millions of customers, and planning for enough clean energy to meet the demands of data centers. Instead, PJM continues to uphold market structures that favor pricey fossil fuels and stick everyday customers with Big Tech's power bills."

About the Sierra Club

The Sierra Club is America's largest and most influential grassroots environmental organization, with millions of members and supporters. In addition to protecting every person's right to get outdoors and access the healing power of nature, the Sierra Club works to promote clean energy, safeguard the health of our communities, protect wildlife, and preserve our remaining wild places through grassroots activism, public education, lobbying, and legal action. For more information, visit https://www.sierraclub.org.