March 19, 2025

PJM Capacity Costs Are About to Rise – What You Need to Know

The PJM Capacity auction conducted last July cleared at record-high values, pushing total capacity market costs to over $15 billion—a nearly tenfold increase. These higher rates are now set to impact your energy invoices and are expected to remain elevated for several years.

Key Impacts:

• The June 2025 – May 2026 auction rates are only now beginning to affect energy supply costs across the region.
• Most of PJM will see capacity charges jump from a fraction of a cent per kWh today to nearly 2 cents per kWh starting June 1, 2025.
• Capacity costs in Baltimore Gas and Electric’s (BGE) territory will rise from approximately 0.5 cents per kWh today to over 3 cents per kWh starting next June.
• Customers with lower load factors (those with inconsistent energy demand) will experience even higher cost increases.
• The upcoming June 2026 – May 2027 auction is expected to clear only slightly lower, as the system remains undersupplied.

Fixed-Price Contracts May Be Affected

Even customers on fixed-price agreements could see increases, as some contract clauses allow for pass-through adjustments in response to extreme market changes.

For more information about this or other developing regulatory matters that may affect your energy supply costs please contact your Tradition Energy Advisor.