What Is PJM and What Are Capacity Costs?
PJM Interconnection coordinates the flow of electricity across 13 states and Washington, D.C. To ensure the grid stays reliable during times of high demand (like summer heatwaves), PJM holds auctions for something called “capacity.”
Capacity refers to power that generators agree to have available when needed—even if it’s not used every day. Businesses don’t pay this cost directly in one line item, but it’s baked into the supply portion of their electricity bill.
When PJM’s capacity prices go up, your energy supply rates often follow—especially if you’re not locked into a well-structured supply contract.
What’s Changing in 2025?
PJM’s latest capacity auction resulted in a significant price increase for the 2025/2026 period. Some regions will see prices more than double compared to prior years. This is largely due to:
- Retiring fossil fuel plants
- Delays in new generation coming online (especially renewables)
- A growing demand for power across the region
The increase will impact most commercial and industrial energy users in PJM territory, which includes states like Pennsylvania, Ohio, New Jersey, Illinois, and Maryland.
How This Impacts Your Business
If your business operates in PJM territory, here’s what this could mean:
- Higher electricity bills starting in mid-2025
- Budgeting challenges due to unpredictable market conditions
- Increased exposure to volatility if your energy supply contract expires soon
These increases don’t just affect large manufacturers. Retailers, restaurants, schools, warehouses, and even office buildings could see higher energy costs.
How Comfort Profit Consulting Can Help
The good news? You don’t have to figure this out on your own.
Comfort Profit Consulting helps businesses: ✅ Analyze current energy contracts and usage
✅ Navigate supply options in deregulated markets
✅ Develop strategies to reduce capacity tag exposure
✅ Structure future supply agreements to minimize impact
We’ve helped businesses across industries stay ahead of price increases and negotiate favorable energy supply terms. With the right strategy, you can still protect your business before the new capacity rates hit.
Act Now—Before Prices Are Locked In
Capacity charges are set years in advance, but supply contract renewals often happen just before current terms expire. If you wait too long, you could be forced to accept higher prices.
Now is the time to review your energy strategy with an expert who understands the PJM market.
📞 Contact Comfort Profit Consulting today for a free energy review.
