Demand for electricity in Pennsylvania and surrounding states continues to grow, putting pressure on prices.
The regional grid operator, PJM Interconnection, wrapped up its capacity auction last week. The auction is a measure to secure enough electricity to meet expected demand later on, in this case for power that will be generated starting in 2028.
Prices once again hit a cap of $325 per megawatt day. The cap was first put in place after Gov. Josh Shapiro sued the grid operator for a spike in capacity costs. It was extended through negotiations with other governors in the PJM region and federal regulators.
The amount of power secured falls short of what could be needed to avoid blackouts in extreme conditions. PJM said the shortage "does not necessarily mean that the PJM system will be unable to serve load reliably in the delivery year; it means that PJM would have to operate with slimmer reserves and a greater level of risk."
"These auction results show that demand for electricity continues to grow faster than electricity supply," said David Mills, PJM President and CEO.
Patrick Cicero, a former Pennsylvania Consumer Advocate now with the Pennsylvania Utility Law Project, said even though the cap is keeping capacity prices flat, they are still high.
"It's not necessarily another spike, but it's really, really high prices remaining. It's kind of embedded, enduring high prices," Cicero said, adding that consumers will end up paying more for a less reliable grid.
Cicero said electric rate increases over the past 18 months are costing ratepayers an extra $220 to $320 each year. Capacity prices are just one fraction of an electric bill.
Robert Routh with the Natural Resources Defense Council said the demand is mainly driven by the expected growth of data centers. NRDC, as well as some lawmakers and consumer advocates, has called to exclude these customers from the general auction.
"They should be separated out because of their unique characteristics and the extent to which they are driving prices up for everybody else. They should be removed from the capacity market altogether," Routh said.
PJM said it has taken several steps to prepare for the new demand, including trying to help large load customers buy their own power directly from generators.
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