Electric bills in Pennsylvania could climb as much as 5% as rising rates paid to power plants trickle down the system.
That’s according to PJM Interconnection, a regional body that ensures utilities have enough power to supply their customers during peak demand times, like a heat wave or cold snap.
Each year, the organization holds an auction where the power plants that are the lowest bidders earn the right — and responsibility — to supply the grid if called upon.
The auction sets the price PJM pays power generators, which in turn is passed on to utilities and then to consumers.
This year’s auction took place over several days in July. It led to a 22% increase in what are known as capacity costs which, in turn, will drive the rate hikes that homeowners see.
That was maximum capacity cost increase allowed under an agreement between PJM and Pennsylvania Gov. Josh Shapiro, who filed a complaint with federal regulators after last year’s auction saw capacity costs soar more than 800%.
Shapiro said in a statement his actions have averted “billions in unnecessary energy costs” for Pennsylvanians.
It was no surprise to industry observers auction prices went right up to their ceiling.
“In the face of growing demand and limited new supply coming online, rising capacity prices are to be expected,” said Andrew Tubbs, president and CEO of the Energy Association of Pennsylvania.
PJM estimated this new rate for generators will translate to between a 1.5% and 5% cost increase for customers across its 13-state network, which includes much of the Mid-Atlantic and Midwest regions.
The exact figure will depend on how states and utilities pass along the wholesale costs of electricity to customers, according to PJM.
Customers shouldn’t see any impact right away, as the new capacity prices don’t kick in until June 2026.
Duquesne Light said monthly bills will rise $2 for the average residential customer.
Todd Meyers, a spokesperson for West Penn Power, said it’s “premature to speculate” what the latest auction results might precisely mean for electric bills.
Last year’s eye-popping auction results caused a monthly increase of only $10 for the average Duquesne Light customer and $17 for the average West Penn Power customer.
Utilities do not use higher capacity costs to generate profits, according to experts.
Underlying issues
Shapiro’s settlement with PJM may have saved consumers a few bucks in the short term, but it did little to alleviate the underlying stressors on the electric grid.
For one, the number of power plants is dwindling, especially ones fueled by coal. America’s generating capacity from coal is about half of its peak in 2011.
Meanwhile, Shapiro and others have criticized PJM for being slow to put new projects into the grid.
PJM, for its part, claims to have processed more than 60% of its backlog for connection requests.
It also noted in a blog post after the auction some projects have received approval but remained on hold because of “challenges outside PJM’s scope, such as permitting timelines, supply chain constraints and evolving project economics.”
There’s also the matter of data centers, which use immense amounts of power and are expected to further strain the grid. Several massive proposed data centers in the state were announced last week at the Pennsylvania Energy and Innovation Summit.
Renewable energy advocates have blamed rising capacity costs on power plants that use fossil fuels.
The capacity purchased by PJM includes 45% natural gas and 22% coal, but only a combined 8% between hydro, wind and solar. The rest is made up by nuclear.
Tom Rutigliano, senior advocate for climate and energy at the Natural Resources Defense Council, claimed the amount of available generation has decreased almost entirely because of reliability issues with gas-powered plants.
“The only real solution to higher energy prices is to keep adding more renewable energy and storage to the grid,” Rutigliano said in a statement.
Jack Troy is a TribLive reporter covering business and health care. A Pittsburgh native, he joined the Trib in January 2024 after graduating from the University of Pittsburgh. He can be reached at
