PJM's Next Capacity Auction Runs This Month — Why It's on Track to Hit the Price Cap a Fourth Straight Time

Sometime this December, PJM Interconnection — the regional grid operator that sets wholesale electricity costs for New Jersey, Pennsylvania, and eleven other states — will run its Base Residual Auction for the 2029/2030 delivery year. It won't make the evening news. There's no press conference, no governor's office issuing a statement, no bill in your mailbox the next morning. But if you've read anything I've written over the past year about why electric rates keep climbing in this region, this auction is the thing underneath almost all of it.

Here's why I'm flagging it now, before the results are even in: the last three Base Residual Auctions PJM has run all cleared at the price cap — the maximum dollar amount the market is legally allowed to charge. Not close to the cap. At it. Three times in a row. And the planning documents PJM has already published for this December's auction point toward a fourth.

My name is CJ Smith. I own Solar 4 Heroes. I help homeowners across New Jersey, Pennsylvania, and the East Coast go solar with $0 down. I'm writing about this auction not because I expect it to show up on your bill next month — it won't, not directly, not yet — but because it's the clearest evidence I can point to that the pressure driving electric rates higher in this region isn't a one-year blip. It's a structural pattern, and this December's results are the next data point in it.

---

What PJM's Capacity Auction Actually Does

PJM doesn't sell you electricity directly. It runs the wholesale market that utilities like PSE&G, JCP&L, Atlantic City Electric, and PECO buy from, and a big piece of what they buy is "capacity" — payments to power plants to guarantee they'll be available when the grid needs them most, usually during extreme summer heat or winter cold snaps. The Base Residual Auction (BRA) is where that price gets set, roughly two to three years ahead of the delivery year it covers. Whatever clears in this December's auction becomes part of what utilities pay — and ultimately what you pay — for electricity generated between June 2029 and May 2030.

That lag matters, and I want to be upfront about it: this specific auction's results won't land on your bill this winter. But the auctions that already happened are the ones currently shaping what you're paying, and the pattern across them is what makes this December's results worth watching.

Figures per PJM's own auction results releases and subsequent trade-press reporting. PJM has been running these auctions closer together than its usual multi-year-ahead schedule as it works back toward a standard three-years-forward planning cycle.

In that July 2026 auction, PJM procured 138,318 megawatts of capacity — about 6,831 megawatts short of what its own reliability target called for. The market didn't just clear expensive. It cleared expensive and still came up short.

---

Why This December's Auction Is Expected to Follow the Same Pattern

PJM published its planning parameters for the 2029/2030 auction in early September 2026, and the numbers point the same direction as the last three auctions. The forecast peak load for PJM's territory in that delivery year is 171,916 megawatts — up 3.6% from the prior year's auction — against a reliability requirement of 158,712 megawatts. Demand keeps climbing faster than new generation is coming online to meet it, which is the exact dynamic that's pushed the last three auctions to their ceiling.

A FERC-approved price collar — a floor of $175 and a ceiling of $325 per megawatt-day — governs these auctions through the 2029/2030 delivery year, the one covered by this December's results. I've written about that collar before: it exists to stop prices from spiking without warning, but it also guarantees a floor under the cost that doesn't budge no matter how much new supply eventually comes online. Given that the prior three auctions all landed at or near their respective ceilings, and demand keeps growing faster than supply, there's little in the published numbers suggesting this one breaks the streak.

Who's Driving the Demand

PJM's own independent market monitor, Monitoring Analytics, has put a number on how much of this is data centers. In an analysis covering PJM's last four Base Residual Auctions, monitor president Joseph Bowring attributed $29.4 billion — 46% of the $63.6 billion in total capacity charges over that period — directly to data center-driven demand. That's not a critic's estimate or an environmental group's modeling. That's the market's own watchdog, whose job is to flag exactly this kind of distortion.

For context: more than 80 data centers are currently operating or under construction across New Jersey alone, and PJM's broader footprint is forecast to add tens of gigawatts of new data center demand over the next several years — far outpacing the generation being built to serve it.

---

The Fight Over the Numbers Before the Auction Even Runs

This December's auction almost didn't go forward on schedule as planned. On August 28, 2026, the Maryland Office of People's Counsel — the state's official ratepayer advocate — sent PJM's board a formal letter arguing it would be against the public interest to run the auction using its current procurement target, given how much of the underlying demand forecast is driven by large data-center loads whose actual buildout timelines remain uncertain. PJM's leadership responded in early September, saying the published planning parameters remain subject to adjustment as more concrete large-load information comes in ahead of the auction.

I bring this up because it's not an isolated complaint. New Jersey's own Board of Public Utilities has raised similar concerns about whether PJM's capacity market is functioning the way it's supposed to — I covered that report in an earlier post. What's happening in Maryland this fall is the same argument playing out again, state by state, auction by auction: regional advocates keep telling PJM its targets may be inflated by demand that hasn't materialized yet, and PJM keeps running the auctions largely as scheduled anyway.

---

What This Means for Your Bill — Honestly

I want to be precise here, because I don't think vague alarm serves anyone. This December's auction result won't change your PSE&G, JCP&L, Atlantic City Electric, or PECO bill this winter. It sets costs for June 2029 through May 2030 — years out. What it does tell you is where the trend has been and where it's still headed, and that trend has already shown up in your bill today:

Figures from the NJ Board of Public Utilities' February 2026 certification of that year's Basic Generation Service auction, which blends capacity costs from prior PJM auctions with other supply costs.

Those current numbers already carry the fingerprints of auctions that cleared at the cap. Each new auction that clears the same way adds another multi-year layer to that trend, rolling forward as older, cheaper contracts expire and get replaced. If this December's auction follows the last three, it won't be the thing that spikes your bill next month — it'll be one more confirmation that the floor under your electric costs isn't moving down anytime soon.

---

The One Piece of This You Can Actually Opt Out Of

You can't vote on PJM's auction design, and you can't control how fast data centers get built. But you can change whether the electricity running your home is something you buy from that market or something you generate yourself.

Net metering is the piece that ties this directly back to PJM. In both New Jersey and Pennsylvania, every kilowatt-hour your solar panels produce beyond what you use gets credited at your utility's full retail rate. When that rate climbs — because capacity auctions keep clearing at the ceiling — the value of your system's production climbs right along with it. A solar loan payment, once set, doesn't move. Everything downstream of PJM's auctions does.

---

New Jersey and Pennsylvania's Incentive Stack, as of This Fall

None of this changes what's available to homeowners who go solar right now:

---

Frequently Asked Questions

When does PJM's next capacity auction happen?

PJM's Base Residual Auction for the 2029/2030 delivery year is scheduled to run in December 2026. It sets wholesale capacity costs for the period from June 2029 through May 2030, which eventually flows into utility supply rates in New Jersey, Pennsylvania, and the rest of PJM's 13-state footprint.

Has PJM's capacity auction hit the price cap before?

Yes. The last three Base Residual Auctions — covering the 2026/2027, 2027/2028, and 2028/2029 delivery years — all cleared at or essentially at their price caps. The 2028/2029 auction, held in July 2026, cleared at $325.00 per megawatt-day, the third consecutive auction to land at the ceiling.

How much of PJM's rising capacity costs come from data centers?

PJM's independent market monitor, Monitoring Analytics, attributed $29.4 billion — 46% of the $63.6 billion in total capacity charges — across PJM's last four Base Residual Auctions to data center-driven demand. More than 80 data centers are currently operating or under construction in New Jersey alone.

Will this December's auction raise my electric bill right away?

No. It sets costs for the 2029/2030 delivery year, which is years out from today's bills. What it does is confirm the trend already baked into current rates — capacity costs clearing near the ceiling, auction after auction — rather than causing an immediate jump.

Does New Jersey have any say in how PJM runs these auctions?

New Jersey's Board of Public Utilities has publicly raised concerns about whether PJM's capacity market is functioning as intended, and other states — Maryland's ratepayer advocate formally objected to this December's auction parameters in an August 2026 letter to PJM's board — have raised similar objections. States participate in PJM's stakeholder process, but PJM, not any single state, ultimately runs the auction.

Does going solar protect me from PJM-driven rate increases?

Yes, for the portion of your bill tied to grid electricity. A solar system paired with a fixed-payment loan means the electricity your panels generate isn't purchased through a market that's cleared at its price ceiling three auctions running. Net metering means a rising utility rate actually increases the value of your system's credits rather than costing you more.

---

The Pattern Doesn't Need This Auction to Prove Itself

I don't know exactly what number this December's auction will clear at. Nobody does yet — not me, not PJM's own market monitor, not the Maryland ratepayer advocate who just asked PJM to reconsider its targets. What I do know is that the last three auctions cleared at their ceilings, the demand forecast for this one is up again, and the independent party whose job is to call out market distortions has put a nine-figure number on how much of it traces back to data centers rather than homes like yours.

That's not a reason to panic about next month's bill. It's a reason to stop assuming the pressure on electric rates in this region is temporary. If you're weighing whether to go solar this year or wait and see what happens, this is what "waiting and seeing" has actually looked like for three auctions running.

Solar made easy.

📞 Call or text us directly
💻 Get a free quote at Solar4Heroes.com

---

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.