On July 22, 2025, PJM’s 2026/2027 capacity auction cleared at $329.17/MW-day, a 22% increase from last year’s $269.92/MW-day. This is the highest capacity rate on record, reaching the FERC-approved price cap – on top of the significant increase that first took effect in 2025. As a reminder, the capacity auction affects the electric supply capacity or “demand” cost which is factored into a portion of a customer’s bill.
Key Points
- Commercial customers should expect 1-5% higher bills starting June 2026. This is on top of the 28%-30% increase in 2025 discussed in our April communication. Residential customers will also see increases.
- The 2025 increase (from $28.92 to $269.92/MW-day) marked the sharpest jump in PJM history, and the 2026 auction builds further on that.
- Rising demand from electrification, data centers, and industry continues to strain grid capacity.
What It Means for You
As we noted in our April communication on the same topic [found here], capacity costs are now a major driver of supply rates. This latest increase underscores the need for proactive strategies such as reducing Peak Load Contribution (PLC) through controls, peak management, and distributed resources to mitigate ongoing cost escalation.
How Elara Can Help
To help navigate a course forward, Elara Engineering can support customers during this period of uncertainty. Specifically, our High-Performance Building 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.
