Pennsylvania electricity customers will not yet face another jump in electricity costs after PJM Interconnection published its newest capacity auction results.
Consumer advocates say the strain comes from a growing mismatch: Data centers are driving power demand higher, but new generation and storage are not being added quickly enough to match it.
What's happening?
Late Tuesday, PJM — the grid operator for 13 states and Washington, D.C. — held an auction to set capacity costs for the 2028-29 delivery year, and as Reuters reported, it "held near record highs at about $325 per megawatt-day, the maximum allowed under a temporary price cap."
Reuters noted "PJM fell short of its reliability requirement, meaning it is at higher risk of electricity shortfalls that could lead to blackouts during times of high demand," but that prices are not expected to increase until 2028 because the price cap was in effect last year, too.
"These auction results show that demand for electricity continues to grow faster than electricity supply," PJM President and CEO David Mills told Reuters. "At the same time, PJM recognizes how this supply-and-demand imbalance impacts the reliability of the system and costs for consumers."
Such costs can show up on electric bills since utilities pass them along over time. Before the release, advocates warned that a high clearing price could keep household electric bills in the Keystone State elevated, according to The Center Square.
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Patrick Cicero, a former Pennsylvania consumer advocate and now counsel with the Pennsylvania Utility Law Project, said the previous round of capacity-price increases had already raised annual costs for the average household by an estimated $220-320. He also said that for households who use a lot of electricity, the increase could be $50-60 more per month, The Center Square reported.
He said Pennsylvanians had paid roughly $1.2 billion in extra costs over the past 18 months.
Why does it matter?
The purpose of capacity markets is to make sure power plants and other resources are ready to be used when electricity use peaks. Prices can surge when demand rises faster than new energy projects are able to get connected to the grid.
At a Monday news briefing held by the Clean Power PA coalition, speakers said data centers had become the leading source of demand growth across PJM.
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Many of those facilities are being built to support artificial intelligence computing. AI can help optimize power systems, improve demand forecasting, and support cleaner energy operations.
But AI-linked data centers use enormous amounts of electricity and water, raise concerns about security and misuse, and can contribute to higher energy costs when infrastructure does not expand fast enough. Data centers in Nebraska owned by Google have used a whopping 732.1 million gallons of water — which is also concerning since much of the state was experiencing extreme drought.
State Senate President Pro Tempore Kim Ward has argued that Pennsylvania is put at a disadvantage by the PJM price cap even though the state exports large amounts of electricity because its ratepayers can end up covering costs tied to shortages and policy decisions elsewhere in the region.
What's being done?
Advocates say the auction cap provided temporary relief but that it did not fixed the underlying problem.
Robert Routh, the Natural Resources Defense Council's Pennsylvania policy director for climate and energy, said the cap at least kept the increases from being even steeper, pointing to PJM estimates that nearly $13 billion in additional capacity costs were avoided across two auctions, The Center Square noted.
Among the reforms pushed by groups was a "reliability backstop" that would require large data centers to support the new generation, batteries, and other resources needed to meet their demand.
They also said data centers should bring their own capacity instead of entering the market in a way that pushes prices higher for everyone else. The Center Square reported advocates said separating data centers could reduce consumer costs by nearly $10 billion a year.
The groups want closer scrutiny of demand forecasts so speculative projects do not inflate needs or cause unnecessary grid spending.
"The overwhelming driver of that $1.2 billion is because of data center load growth," Cicero said. "... This is real dollars that are coming out of Pennsylvanians' pockets."
Elowyn Corby, senior mid-Atlantic regional director for Vote Solar, told The Center Square, "While there is still a lot that states and communities can do to get around PJM, ignoring it is simply no longer an option."
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