Power bills keep climbing — and pressure is on PJM to rein in costs

The original story by Naureen S Malik for Bloomberg.

The heat is rising on the nation’s biggest power grid operator as electricity costs just hit another record — and consumers across a huge swath of the country are feeling it.

Homes and businesses from New Jersey to Illinois are now on the hook for a record $16.4 billion just to make sure there’s enough electricity available starting in June 2027, according to PJM Interconnection, the operator of the 13-state grid that serves nearly one in five Americans. And that’s before anyone even flips a light switch.

This charge — known as the capacity cost — shows up as a separate line item on utility bills, on top of what customers pay for the power they actually use and the fees tied to maintaining transmission lines.

PJM’s annual capacity auction, which pays power plants simply for being available, delivered its third straight record year. The daily cost rose to $333.44 per megawatt, up slightly from last year’s already-high $329.17. For context, prices were as low as $29 per megawatt just two years ago.

“The amount of pressure on PJM is enormous,” said Daniel Palken of Arnold Ventures. “People’s hackles are up.”

And it’s not just ratepayers complaining. Governors across the region and lawmakers in key states have been pushing PJM to overhaul how the system works — especially as electricity demand explodes.

At the heart of the surge is the AI data center boom. According to PJM’s independent watchdog, data centers accounted for 45% of the price increase in the last auction and made up most of the new demand this time around.

“The energy market is not capable of meeting unlimited growth in a short amount of time without massive price increases,” said Ben Inskeep of Citizens Action Coalition in Indiana.

The irony? Despite soaring costs, PJM still didn’t buy enough power to meet its own reliability standards. The grid needs a 20% reserve margin, but the auction only secured 14.8% — leaving PJM short by 6.6 gigawatts, roughly the output of six large nuclear plants. The grid operator will now need to run follow-up auctions to close the gap.

Independent power generators walked away with billions:

• Constellation Energy: $2.19 billion;
• Vistra Corp.: $1.29 billion;
• Talen Energy: $1.07 billion.

Shares of Vistra and Talen jumped after the results.

Maryland lawmaker Lorig Charkoudian wasn’t impressed.

“This auction remains a wealth transfer from struggling ratepayers to incumbent generators,” she said. “I’m angry. It didn’t have to be this way.”

Constellation says high prices are prompting action, not complacency. The company plans to add thousands of megawatts of new capacity and boost output from existing nuclear plants, citing the national security stakes of powering AI.

Costs would be even higher if not for a temporary price cap negotiated last year. With prices now hitting that ceiling, analysts say PJM is more likely to extend it — though that’s controversial. Developers argue caps make it harder to finance new power plants, while governors say consumers can’t take much more.

Pennsylvania Gov. Josh Shapiro didn’t mince words.

“PJM needs real reform and they are running out of time to protect consumers,” he said.

Meanwhile, PJM is finalizing an $11.6 billion transmission buildout — new wires, substations and upgrades largely driven by data center demand. Those costs, too, will land on consumer bills.

Federal regulators could weigh in soon on how data centers should share the cost burden, especially when they’re built next to power plants. And tech giants like Amazon, Google and Microsoft will be closely watched to see whether they step up financially.

For now, though, the message is clear: electricity is getting more expensive, the AI boom isn’t slowing down, and the political pressure on PJM to fix the system is only intensifying.