Starting in June of 2025, all customers located within the Commonwealth Edison (ComEd) electrical service territory are expected to see a significant increase in their electric bills. The increase is not related to the cost of the delivery of electricity, but rather, an increase in electric Supply capacity or “Demand” cost. Each customer’s electric bill includes many charges. One of those charges listed under the Supply category is the capacity charge. This charge is calculated by the maximum number of kilowatts used (Demand) during a defined period of time. The capacity charges are associated with the costs to ensure sufficient power supply is available from the grid to meet your peak “demand” energy usage.
The ComEd service territory is located within the PJM (Pennsylvania-New Jersey-Maryland) Interconnection regional generation and transmission area which includes 13 states and the District of Columbia. PJM Interconnection is responsible for and manages the regional transmission grid, ensures generation reliability, and coordinates the flow for electricity from the point of generation to the local distribution grid. Additionally, PJM is responsible and operates a competitive wholesale electricity market where utilities and other participants buy and sell electricity.
Starting in 2022, PJM is seeing a higher demand for electricity within the region and a mismatch between generation resources: this is comprised of resources being retired and new resources coming online. Given the growth of electrification coupled with the proliferation of high-demand requests from data centers, manufacturing, and others, the demand for electricity is forecasted to increase. In addition to the projected increases in demand, PJM has identified concerns with the reliability of resources to meet this demand. Current trends indicate that replacement reserves will primarily be composed of intermittent megawatts (MW) and limited duration resources which leads to the need to create multiple MW of resources to replace 1 MW of retired resources for electricity generation. All of this means that the supply and demand cures are changing and with it the regional electrical capacity, which increases the cost.
What to Expect
PJM holds capacity market auctions or Base Residual Auctions (BRA) to set the future capacity pricing for electrical generators and end users in the region. The most recent auction produced a price of $269.92/MW-day for much of the PJM region, including ComEd’s service area.
For comparison, over the past three delivery years, the average capacity auction price has been around $37.68/MW-Day. For the current 2024/2025 delivery year, the capacity price is $28.92/MW-day. Based upon the auction results for the delivery year 2025/2026, the capacity price rose to $269.92/MW-day, nearly a 10-fold increase. This increase means every, commercial or residential customer within the ComEd service territory will see an increase in their monthly electric bills by 28% to 30%. Demand is only a portion of the customer’s bill which incorporates a variety of charges: therefore, the customer’s total cost does not increase 10-fold.
To help navigate a course forward, Elara Engineering can support customers during this period of uncertainty. Specifically, our High-Performance Buildings Studio can analyze electricity price impacts and perform studies to identify opportunities to manage and reduce electricity costs for specific buildings, sites, and portfolios.
Please reach out to our Building Performance Studio Leader, Cem Diniz (cdiniz@elaraeng.com), Sustainability Lead, Charlie Saville (csaville@elaraeng.com), or your existing Elara contact to discuss potential impacts and opportunities for your building.
