Exec Insights

PJM Capacity Auction Prices and What that Means for you. In Plain Language!

Energy prices are rising in Ohio and Pennsylvania. PJM capacity auction increases mean increases in energy prices. How to protect your budget.

What the Latest Electricity Market Decision Means for you. 

You may have heard about a recent decision by federal regulators that could impact the cost of electricity in our region. We want to explain what’s happening—and what it means for you—in plain language.


The Federal Energy Regulatory Commission (FERC) just approved a plan by PJM, the organization that manages the electricity grid in our area, to put temporary limits on certain electricity market prices. These prices help determine what power generators get paid to keep enough energy available for the future—especially during peak demand times like heat waves or winter storms.

Without this decision, those prices were set to jump sharply this summer, which could have led to even higher electric bills for many households and businesses. Instead, this new plan places a cap and a floor on those prices for the next two years. It’s a bit like putting bumpers on a bowling lane—prices won’t go too high or too low.

This move is meant to strike a balance: keeping electricity reliable while helping avoid sudden cost spikes for consumers like you. The reality is that our energy system is going through big changes, including more demand, older power plants retiring, and delays in bringing new sources online. PJM and regulators are trying to manage these changes carefully.


At APG&E, we support steps that provide price stability and long-term planning—because that helps us continue offering fair rates and reliable service to you. While changes in the broader electricity market can affect everyone, we’re always working behind the scenes to minimize that impact and advocate for your best interests.

As the industry evolves, we’ll keep doing what we do best: watching the trends, adapting to the rules, and delivering dependable energy—so you can focus on what matters most in your life.
If you ever have questions about your bill or the energy market, we’re always here to help.

Key Takeaways:

  • The 2024 PJM Capacity auction saw prices surge nearly ninefold, signaling significant market volatility.

  • Ohio and Pennsylvania energy prices rising this summer. 
  • Consumers in PJM states should expect higher electricity bills as utilities pass on these increased capacity costs. Consumers can mitigate rising energy costs by locking in long-term fixed rate electricity plans with suppliers like APG&E. 

The Purpose of Capacity Auctions

One of PJM’s key responsibilities is to conduct capacity auctions. Rather than focusing on the immediate buying and selling of electricity, these auctions aim to secure future capacity—ensuring there will be enough power to meet demand years in advance. During a capacity auction, electricity generators commit to being ready to produce a specific amount of power in the future, usually three years from the auction date. These commitments assist PJM in planning for upcoming energy needs and maintaining grid reliability.

The goals of these auctions are twofold:

  • To ensure that adequate generating capacity is available to satisfy future electricity demand.
  • To provide price signals that accurately reflect the costs associated with maintaining that capacity.

In essence, capacity auctions serve as a safeguard against potential future shortages, motivating generators to invest in the upkeep or expansion of their capacity.

 

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