PJM Hit the Price Cap for a Third Straight Year — Now New Jersey's Own Watchdog Says the Market Is Broken

On July 14, 2026, PJM Interconnection released the results of its capacity auction for the 2028/2029 delivery year — electricity that won't even flow until June 2028. The price cleared at $325 per megawatt-day, the FERC-approved ceiling for the entire 13-state footprint. That's the third consecutive PJM capacity auction to slam into the price cap, following $329.17/MW-day for 2026/2027 and $333.44/MW-day for 2027/2028.

Then, almost exactly a month later, New Jersey's own Board of Public Utilities weighed in — and not gently. On August 13, 2026, the NJBPU released a report titled "An Investigation of PJM's Capacity Market," concluding that the market "can no longer deliver reliable power at the lowest possible cost." This wasn't a press release from an advocacy group. It was New Jersey's own utility regulator, using its own statutory authority, publicly agreeing with what homeowners have been telling me at their kitchen tables for two years: something in this system is broken.

My name is CJ Smith. I own Solar 4 Heroes. I've written about PJM auctions before, because they're the single biggest reason New Jersey electric bills have climbed so fast. This time, I want to walk you through both pieces of news together — the auction and the state's own diagnosis of why it keeps happening — because together they tell you something important about where your bill is headed and how much control you actually have over it.

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What Happened on July 14: The Numbers Behind the 2028/2029 Auction

PJM's Base Residual Auction runs on a schedule: bidding opened June 30, closed July 7, and results were announced July 14, 2026. Here's what it produced.

Figures from PJM's July 14, 2026 auction report and PJM Inside Lines news release.

Two numbers in that table matter most to a New Jersey homeowner. First, the auction cleared below the reliability target PJM itself set — meaning the system procured less cushion against extreme weather and demand spikes than its own planners say is prudent. Second, almost none of that capacity is new: only about 525 megawatts of new generation or uprates cleared in an auction covering nearly 150,000 megawatts total. The grid isn't attracting meaningfully more supply. It's just paying more for the supply it already has.

Who's Driving the Cost

PJM's own Independent Market Monitor — the internal watchdog whose job is to flag exactly this kind of thing — calculated that data centers accounted for $6.3 billion of the $16.4 billion in total capacity charges from this auction, or 38%. That's not a solar industry talking point. That's PJM's own market monitor, Joe Bowring of Monitoring Analytics, putting a number on it. Sierra Club senior advisor Jessi Eidbo summed up the reaction bluntly: "it's little surprise that this capacity auction also hit the auction ceiling once again, resulting in no reprieve for record-high prices for customers."

One more detail worth sitting with: this auction's supply mix was 46% natural gas, 20% nuclear, 18% coal, 5% demand response, 4% hydro, 2% wind, 2% oil, and just 1% solar. Solar and wind remain the cheapest new generation to build almost anywhere in the country, and PJM's interconnection queue is stuffed with proposed solar and battery projects — but very little of it gets built and connected fast enough to show up in an auction like this one. That bottleneck, more than any single fuel source, is why prices keep landing at the ceiling.

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What New Jersey's Own Report Found

Here's the part I think deserves more attention than it's gotten. New Jersey didn't just complain about PJM's auction results after the fact this time — the state ordered a formal investigation into whether PJM's capacity market design is even working as intended, and it published the findings.

That investigation was directed by state legislation (P.L. 2025, JR-11), signed roughly a year earlier on August 15, 2025, which instructed the NJBPU to examine whether PJM's Reliability Pricing Model is achieving resource adequacy at the lowest reasonable cost. BPU staff spent the year reviewing auction data, regional demand forecasts, and reform proposals already circulating at PJM, in other states, and before federal regulators. The resulting report, released August 13, 2026, didn't mince words.

NJBPU President Ben Hertz-Shargel put it this way: "New Jersey ratepayers deserve a clear explanation of why their bills are rising and what can be done about it. The fastest way to lower bills is getting new power generation built. That requires replacing PJM's unpredictable price spikes with modern rules that attract long-term investment while protecting customers. States must be allowed an active role in PJM governance to ensure wholesale market structures serve the public interest."

The report's core recommendations:

Why does capacity even matter this much? Because it's one specific line item state regulators can't directly set. The BPU can review a utility's distribution rate case or approve a solar incentive program, but capacity charges — which the report notes make up roughly 15% to 20% of a typical residential bill — are set by PJM's regional auction, not by Trenton. That's exactly why the state had to investigate the market itself rather than just regulate around it.

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"Broken" and "Reformed" Are Two Very Different Timelines

I want to be honest about what this report is and isn't. It's a serious, credible diagnosis from the state's own regulator — not a policy that's already in effect. Every one of those recommendations requires PJM's own stakeholder process, FERC approval, or both, to actually change how the market runs. That process, historically, takes years, not months. PJM's last major capacity market redesign, adopted in 2024 to speed up interconnection and stabilize prices, is part of why the 2027/2028 auction ran on an accelerated December 2025 schedule instead of the normal summer slot — and prices still hit the ceiling anyway.

Here's the honest comparison I'd draw for a homeowner reading this:

I don't say that to dismiss the BPU's work. This report is exactly the kind of pressure that, over time, actually moves FERC and PJM's stakeholder process. But "more likely to produce reform eventually" and "lowers your bill this year" are different claims, and I'd rather tell you which one is actually true than let a hopeful headline do it for me.

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What Retail Bill Impact Actually Looks Like, Historically

To size this, look at what past auctions have done to real bills once utilities translated wholesale capacity costs into retail rates. When the 2025/2026 delivery-year auction jumped from roughly $29.92/MW-day to $269.92/MW-day, the retail translation that hit New Jersey bills starting June 1, 2025 came out to an estimated 17.24% increase for PSE&G customers and 20.20% for JCP&L customers, according to figures the BPU itself certified. The following year's auction, which cleared at $329.17/MW-day for the 2026/2027 delivery year, added a further estimated increase on top of that.

As of this week, utilities and the BPU have not yet published a retail bill-impact estimate tied specifically to this newest 2028/2029 auction — that kind of translation typically comes out closer to the delivery period itself, sometime in 2027 and 2028. I won't invent that number here. What I can tell you with confidence is the pattern: a capacity auction clearing at or near the price cap has, every time it's happened over the past two years, turned into a real, double-digit-adjacent percentage increase on New Jersey bills. Nothing in this report or these results suggests that pattern is about to reverse before 2028.

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Where Solar Actually Fits Into This

Here's the honest version of what I tell homeowners who ask me about this. A solar system doesn't change PJM's auction, lobby FERC, or fix the interconnection queue keeping cheap solar and battery projects from clearing these auctions in meaningful volume. None of that is what solar does.

What it does is take your household's electricity cost out of that system entirely. Under New Jersey's net metering rules, every kilowatt-hour your panels send back to the grid is credited at the full retail rate — a rate that includes whatever capacity costs this auction, and the next one, eventually bake in. When that retail rate rises because of an auction like this one, the value of your solar production rises right along with it. A fixed-payment solar loan, by contrast, doesn't move at all — not when this auction clears, not when the next one does, regardless of whether PJM ever adopts a single one of the BPU's recommendations.

New Jersey's incentive stack remains solid heading into fall 2026: the SuSI/SREC-II program pays in the mid-$70s to $85 per megawatt-hour for 15 years depending on your registration date, net metering credits excess production at the full retail rate, and the statewide sales tax and property tax exemptions remain automatic. None of that changed with either the auction or the BPU report.

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Frequently Asked Questions

Why did PJM's capacity auction hit the price cap again in 2026?

PJM's July 14, 2026 auction for the 2028/2029 delivery year cleared at $325/MW-day, the FERC-approved ceiling, for the third consecutive year. PJM's own Independent Market Monitor attributed 38% of the $16.4 billion in total capacity charges to data center demand, while only about 525 MW of new generation cleared — meaning demand keeps outpacing new supply badly enough to push prices to the maximum allowed.

What did New Jersey's BPU report on PJM actually find?

The report, released August 13, 2026 and titled "An Investigation of PJM's Capacity Market," concluded that PJM's capacity market "can no longer deliver reliable power at the lowest possible cost." It recommends shifting to a seasonal, more near-term ("prompt") auction structure, requiring large new loads like data centers to bring their own generation, expanding long-term contracting, and giving states a bigger governance role in PJM.

When will the 2028/2029 PJM auction results actually show up on my electric bill?

The 2028/2029 delivery year runs June 2028 through May 2029, so this capacity cost won't hit retail bills until then. Utilities and the BPU have not yet published a specific retail percentage impact for this auction — those estimates typically come out closer to the delivery period.

Will New Jersey's BPU report actually change how PJM's auctions work?

Not immediately. Every recommendation in the report requires PJM's own stakeholder process and, in most cases, approval from the Federal Energy Regulatory Commission, before it changes how an auction actually clears. That process has historically taken years. The report is a serious, credible push for reform — but it's a push, not a change that's already in effect.

Do data centers have to bring their own power generation in New Jersey?

New Jersey has already enacted requirements in this direction, including the Data Center Fair Share Act signed in July 2026, which creates a separate rate class and cost-commitment structure for large data centers. The new BPU report recommends going further at the PJM level — requiring large loads across the whole grid, not just in New Jersey, to bring new generation or accept lower-priority service.

Does solar protect me from PJM capacity auction price increases?

Yes, in the sense that matters most: it removes your household from the exposure. A fixed-payment solar loan doesn't move when a PJM auction clears at the price cap. And under New Jersey's net metering law, when the retail rate rises because of costs like this one, the value of your solar production rises with it — the opposite of what happens to a homeowner who stays fully on the grid.

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The Honest Takeaway

I give New Jersey real credit here. Ordering an actual investigation into whether PJM's market design works, rather than just reacting to each new auction with a press statement, is the kind of homework state regulators should be doing, and it puts New Jersey's recommendations on the record in a way other states and federal regulators will have to reckon with over time. But "over time" is the operative phrase. The 2028/2029 auction already cleared at the price cap, the reforms this report calls for don't exist yet, and the pattern of the last three auctions — cap, cap, cap — hasn't shown any sign of reversing on its own.

If you're tired of waiting to see whether this is the year PJM's market finally gets fixed, that's a conversation I have with homeowners every week. I'll give you real numbers for your home — what a fixed solar payment looks like today, set against a grid whose largest single line item was just called broken by the state's own regulator.

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Solar 4 Heroes serves homeowners across CT, DE, FL, MA, MD, NH, NJ, NY, PA, RI, and VA. Call us at (856) 308-5144 or reach out at cj@solar4heroes.com.