On December 17, the PJM Interconnection announced the capacity electricity auction prices again hit the $333 MW/day market cap imposed by Gov. Shapiro’s lawsuit settlement for securing 134,479 MW of electric generation for delivery in 2027-28.

Without the cap, the price would have been at least 58.8% higher at $529 MW/day driving electricity bills even higher.

Electricity demand has surged driven primarily by A.I. data centers, while generators have failed to bring new energy resources online fast enough.

As a result, capacity prices have skyrocketed.

PJM’s 2025–26 auction, held in July 2024, resulted in costs of $14.7 billion, an increase of more than 800 percent from the prior year.

The subsequent auction, held in July 2025, drove costs even higher — reaching $16.1 billion.

This December auction had a clearing price total of $16.4 billion.

"This auction leaves no doubt that data centers’ demand for electricity continues to far outstrip new supply, and the solution will require concerted action involving PJM, its stakeholders, state and federal partners, and the data center industry itself,” said Stu Bresler, Executive Vice President – Market Services and Strategy, who becomes chief operating officer on Jan. 7.

Gov. Shapiro said in a statement-- “I sued PJM because it is unacceptable for them to do nothing as consumers pay sky-high utility bills while getting nothing in return.

“My Administration has once again stopped billions of dollars in unnecessary and unjustified energy price hikes from being passed on to families and businesses.

“ PJM needs real reform and they are running out of time to protect consumers from their inaction.

“My Administration will continue  to build more energy generation right here in the Commonwealth and push PJM to fix its broken process so we can lower costs, strengthen reliability, and keep more money in the pockets of Pennsylvanians.”

This is the last auction subject to the market cap settlement agreement.

On December 3, Gov. Shapiro and five other governors in the PJM service territory wrote to the PJM Board urging them to immediately extend the market price cap agreement for one further auction to be held in June 2026 to allow time for additional reforms to be adopted.  Read more here.

Results Do Not Meet Reliability Standard

PJM said the capacity of the resources procured in the auction, plus Fixed Resource Required resources, is short of PJM’s reliability requirement by 6,623 MW, meaning that the committed supply is less than what would be required to meet the one-event-in-10-year reliability standard of a 20% reserve margin.

This does not necessarily mean, however, that the PJM system will be unable to serve load reliability in the delivery year.

PJM continues to hold a reserve margin of 14.8%, and there are several mitigating factors that could improve the reliability picture for the system in the 2027/2028 Delivery Year.

5,100 MW Of 5,250 MW Of New Demand Is Data Centers

PJM said the forecast peak load for the 2027/2028 Delivery Year is approximately 5,250 MW higher than the forecast used for the 2026/2027 capacity auction.

Nearly 5,100 MW of that increase is attributable to data center demand.

Energy Mix

The cleared resource mix in this auction includes: 43% natural gas, 21% nuclear, 20% coal, 5% demand response, 4% hydro, 2% wind, 2% oil and 1% solar, according to PJM.

The auction cleared 774 MW  of new generation and generation uprates.

The total amount of supply in the PJM service area increased from 196,650 MW to 200,994 MW, or an increase in the total amount of supply by 4,344 MW installed capacity

Click Here for the PJM announcement.

Reactions

PUC Commissioner Kathryn Zerfuss said in another context- “So we all know that we have many challenges as it relates to energy supply and demand, and the gap between supply and demand is just growing more and more every day.

“We totally maintain that we have to take advantage of every single molecule and electron we can from all energy sources, whether it's solar, wind, for our electric grid.” Read more here.

John Quigley, Kleinman Center For Energy Policy, said-- “This is the third consecutive PJM capacity auction that has resulted in record-high costs, which will further raise electricity prices for consumers.

“Plus, the auction didn't secure enough supply to meet projected demand.  That will require additional procurement that will push costs even higher.

“Almost all the projected increase in demand that is driving this result comes from data centers.

“PJM has failed to  require that these data centers pay their own costs and is forcing consumers to subsidize them.  That must change - fast. The need for reform of PJM is urgent.”

Tom Rutigliano, Natural Resources Defense Council, said "Summer 2027 will be the first time in PJM’s history it expects to not have enough power to reliably meet demand because of new data center forecasts and the ongoing risk of fossil fuel generators failing during winter storms.

"Data centers are applying to connect to the grid much faster than the grid can keep up. Right now, PJM and its member utilities are promising power they simply don’t have.

“Most troubling is that there was only 956 MW of new supply, even though this was the third year of very high prices. That’s less than a 1% increase in supply.

"Delays in building transmission, supply chain issues, barriers to siting new renewables, and PJM’s interconnection queue have combined to leave the region locked up and simply unable to build power plants. We’re throwing money in a hole right now.

“PJM must take action to protect the public from cost and reliability impacts by requiring new data centers that want to connect to the grid bring their own capacity.

"Otherwise, electricity bills will continue to rise and reliability will suffer. Worse, nearly all of the billions of dollars that customers will be charged will go to existing power plants, not to new supply and transmission infrastructure PJM desperately needs.”

Andy Tubbs, President and CEO of the Energy Association Of Pennsylvania [Electric, Natural Gas Distribution Utilities], said-- “For three consecutive auctions, capacity prices have skyrocketed, with the latest resulting in $16.4 billion in payments to existing generators.

“Yet even at these record-level prices, the auction fell short of PJM’s reliability requirement and added minimal new generation.

“Customers are paying more, but the market is still failing to deliver enough new supply to keep pace with growing demand.

“While some are raising concerns about new projects that will require energy, Pennsylvania’s economic growth is already driving record demand and stretching supplies to the limit.

“We cannot allow the lack of new generation to threaten reliability, drive up monthly costs for families and businesses, and squander economic opportunities.

“Make no mistake: Without enhanced procurement and practical tools to bring new generation online, Pennsylvania runs the risk of facing the same affordability and reliability challenges already hitting customers in New Jersey and Maryland.”

The Reliable Grid Project issued this statement--

“Developers are literally waiting in line to build the energy projects states need, but PJM is really struggling to get this new supply connected to the grid quickly enough,” said Jon Gordon, Director, Advanced Energy United. “Reforms are in the works, but don’t go far enough, and in the meantime, some energy projects have been languishing in the PJM queue for four or five years. This auction also fell 6 GW short of the target, meaning there's just not enough generation out there to meet the demand.”

Nikhil Kumar, Program Director at GridLab, warned that these factors are creating a "perfect storm" of increased demand and limited supply, leading to higher costs for consumers and potential reliability risks.

“Data centers are being built at a pace that far outstrips the ability of the system to balance supply and demand,” said Clara Summers, Consumers for a Better Grid Campaign Manager, Citizens Utility Board of Illinois (CUB). “This auction result underscores the urgent need for reforms to ensure affordability and reliability across PJM.”

The Clean Power PA Coalition said-- “The latest PJM capacity auction signals still more electric bill increases ahead for millions of Pennsylvanians.

“Even with Governor Shapiro’s effective intervention to cap PJM auction prices, electric bills will increase yet again with this auction.

“This will come after most Pennsylvanians were hit with annual electric bill increases of more than $100 this past year, with price hikes ranging from 12% to 27%.

“What’s worse, those higher prices don’t necessarily mean there will be enough capacity to meet demand during periods of extreme weather during 2027-28, which could increase the risk of blackouts.

“The backlogged PJM process to approve new energy sources to the grid, especially many backlogged cheap, clean energy projects awaiting approval, means that PJM is not keeping up with the rapidly growing demand for electricity, driven largely by huge data centers.

“This failure to bring new energy online quickly enough, combined with PJM’s outmoded design for purchasing energy and its failure to build out more electric transmission, is driving up prices for all of us.

“The auction price cap that Governor Shapiro successfully negotiated with PJM a year ago was intended to give PJM time to institute long-term solutions.

“Over that period, PJM has accomplished little to address the underlying problems that are driving up prices. Unless extended, the next auction will take place this summer without adequate cost protections for electric bill customers.

“PJM must act with urgency to put an end to these outrageous electric bill hikes. For starters, it must remove barriers to cheap, clean, and reliable clean energy by quickly clearing its huge backlog of new energy projects waiting to connect to the grid. 

“It must continue reforming its process for purchasing energy to ensure that people are not overpaying for their electricity.

“Finally, it must improve its transmission planning to more quickly build out more long-range transmission lines.”

Resource Links - Energy Affordability:

-- PUC: Most PA Electric Utility Consumers To See 3.7% To 10.6% Increase In Electricity Prices During The Next 3 Months Starting Dec. 1  [PaEN]

-- Morning Call - Elizabeth Deornellas: How A.I. Data Centers Are Driving Up The Cost Of Electricity And What Grid Operators Can Do [PDF of Article]

-- Scranton Times - Chris Kelly Opinion: PPL Proposed 7% Rate Hike A.I. Data Center Driven  [PDF of Article]

-- PJM Electricity Auction Prices Again At Cap Imposed By Gov. Shapiro’s Lawsuit Settlement, Without It Prices Would Be 59% Higher Driven By A.I. Data Center Demand; Grid Reliability Now Questioned  [PaEN]

-- PA Capital-Star: Energy Market Watchers See Electric Bills In PA, Other States Rising As A.I. Data Center Demand Continues

-- PaGasSwitch.com: Natural Gas Costs Increased From 9.26% to 57.5% Over The Last Year For Natural Gas Utility Customers Not Shopping For A Fuel Supplier  [PaEN]

-- Post-Gazette - Anya Litvak: PUC Approves Columbia Gas Rate Increase - 13th Since 2008

-- PUC Highlights Ways Natural Gas Customers Can Manage Winter Energy Use, Costs, Explore Energy Affordability Options  [PaEN]

-- PUC Publishes Updates To Low-Income Natural Gas, Electric Utility Usage Reduction Program Regulations  [PaEN]

-- PUC Chairman Highlights 'Extraordinary Challenges' Pennsylvania Families Are Facing This Winter With Energy Bills And His Appreciation For Groups Providing Assistance  [PaEN]

-- Post-Gazette - Anya Litvak: What’s Important In Affordable Energy?  A Conversation With A Carnegie Mellon Energy Justice Professor

-- Data Center Stampede Trampling PA Ratepayers Part I:  PA Utility Law Project - Utility Terminations Up 30% Already; Prioritize Existing Loads; Centers Need To Help Pay For Utility Assistance  [PaEN]

-- Data Center Stampede Trampling PA Ratepayers Part II: PA Consumer Advocate - PUC Should Set Conditions For Centers To Be Served By The Grid; Set Power Curtailment Priorities [PaEN]

-- Data Center Stampede Trampling PA Ratepayers Part III:  PJM Market Monitor - Data Centers Have Cost Existing Ratepayers $16.6 Billion Already; Centers Should Bring Their Own Power Generation To Prevent More Large Price Spikes  [PaEN]

-- PJM Electric Auction Impacts: 1 In 5 PA Households Report Problems Now Paying Energy Bills; Electric Utility Shutoffs Up 38.1% So Far This Year  [PaEN]

-- PJM Electricity Auction: PJM Lost 2.8 Gigawatts Of Power Due To Reduced Reliability Rating Of Natural Gas Power Plants; Could Gain 12.2 Gigawatts By Increasing Reliability From Less Than 75% Now To An Achievable 90%  [PaEN]

Resource Links - Who Pays:

-- PUC Invites Comments On Proposed Model Tariff To Balance A.I. Data Center Growth And Ratepayer Protection  [PaEN]

-- PUC Votes To Develop Rulemaking To Modernize Electric Interconnection Regulations; Proposed Rule Due In March  [PaEN]

-- PUC Commissioners Agree On Need To ‘Get It Right’ On Reforming Grid Connection Process For Solar, Renewable, All Energy Sources To Protect Consumers, Grid Reliability  [PaEN]

-- Post-Gazette - Anya Litvak: PUC Proposes Special Treatment For A.I. Data Center Power Connections To Contain The Cost Burden On Existing Ratepayers [PDF of Article]

-- Federal Energy Regulatory Commission Orders PJM To Allow A.I. Data Centers To Connect Directly To Power Plants, Expedite Connections For Shovel-Ready Projects, Enhance Load Forecasting  [PaEN]

-- WESA - Rachel McDevitt: PJM Grid Operator Covering PA Failing To Plan For Responsible A.I. Data Center Load Growth, Observers Say

-- PJM Market Monitor Files Complaint With FERC Saying PJM Is Proposing To Allow A.I. Data Centers To Connect To Grid That It Cannot Reliably Serve, Will Require Blackouts To Maintain Service  [PaEN]

-- NRDC: PJM Grid Members Fail To Recommend Any Of 12 Proposals To Prevent Existing Electric Ratepayers From Bearing The Costs, Reliability Risk Of Soaring A.I. Data Center Energy Demand  [PaEN]

-- On The Eve Of New PJM Capacity Auction: Gov. Shapiro, 5 Other Governors Say PJM's Efforts To Deal With A.I. Data Center Demands Have Failed; Urge 'Decisive Action' To Avoid 'Extraordinarily’ High Prices  [PaEN]

-- PA Capital-Star: Shapiro Urges FERC To Consider Consumer, State Regulator, Power Company Comments On A.I. Data Centers Connecting To PJM Grid Proposed By PJM’s Market Monitor To Protect Reliability, Affordability

-- The Center Square: Consensus For Soaring A.I. Data Center Power Demands Still Elusive Among PJM Members

-- PA Capital-Star: PJM Grid Operator Weighs Proposals To Manage A.I. Data Center Impact On Electricity Affordability And Reliability

-- WITF/LancasterOnline: Mild Forecast For PA Winter Heating Bills In Peril As Natural Gas Prices Surge

-- PUC Directs Staff To Develop Rule On Winter Terminations, Payment Arrangements, Other Consumer Protections

Resource Links - Grid Reliability:

-- Utility Dive: FERC Members Raise Alarms About PJM Failure To Meet Reliability Target; Next Load Forecast Could Be Significantly Lower Due To Stricter Vetting Of Data Center Projects

-- North American Electric Reliability Corp: Electric Grid At Elevated Risk Of Insufficient Energy Supplies During Extreme Weather Due To Rising A.I. Data Center Demands, 'Precarious' Natural Gas Supplies  [PaEN]

-- Utility Dive: North American Electric Reliability Corp: Winter Peak Demand Is Rising Faster Than Resource Additions

-- Reuters: US A.I. Data Center Demand Raising Power Risks This Winter, NERC Says

-- Bloomberg: US Faces Winter Blackout Risks From A.I. Data Centers’ Power Needs, NERC Says

-- WGEM: Illinois State Regulators Warn Of Impending Energy Shortfalls As PJM Capacity Prices Rise Again

-- KSDK: A.I. Data Centers Are Sucking Illinois’ Power Grid Dry, Official Report Warns [PJM Service Area]

Related Articles This Week:

-- PJM Electricity Auction Prices Again At Cap Imposed By Gov. Shapiro’s Lawsuit Settlement, Without It Prices Would Be 59% Higher Driven By A.I. Data Center Demand; Grid Reliability Now Questioned  [PaEN]

-- Federal Energy Regulatory Commission Orders PJM To Allow A.I. Data Centers To Connect Directly To Power Plants, Expedite Connections For Shovel-Ready Projects, Enhance Load Forecasting  [PaEN]

-- PUC Votes To Develop Rulemaking To Modernize Electric Interconnection Regulations; Proposed Rule Due In March  [PaEN]

-- PUC Chairman Steve DeFrank Recognizes Staff And 2025 Accomplishments

-- In Case You Missed It: A.I./Data Center Articles - NewClips From Last Week - December 22  [PaEN]

-- Environmental Groups, Our Children’s Trust Appeal Air Quality Permit For Homer City A.I. Data Center 4.5 GW Natural Gas Power Plant In Indiana County  [PaEN]

-- Pennsylvania BRIGHT Expands Statewide To Remove Barriers To Bringing Affordable Solar Energy To PA Homeowners Left Out Of Transition To Clean Energy Options  [PaEN]

-- Philadelphia Solar Energy Association: New Solar Schools Toolkit, Solar Toolkit For Nonprofits, Local Governments Available To Help Deal With Soaring Electricity Costs  [PaEN]

-- PUC Approves $50,000 Penalty Settlement With Peoples Natural Gas Following 2022 Johnstown Pipeline Damage, Fire Incident

-- PUC Approves Settlement With Kaib & Kaib LLC Over Alleged Overbilling Of Natural Gas Customers In Jefferson County; $4,066.16 In Refunds Due, $500 Penalty

-- PUC Chairman Steve DeFrank Recognizes Staff And 2025 Accomplishments

NewsClips:

-- WHYY - Sophia Schmidt: PA, NJ, DE Could See Increased Risk Of Power Outages Due To PJM Supply And Demand Crunch On Regional Grid

-- Utility Dive: PJM Capacity Prices Hit Record High As Grid Operator Falls Short Of Reliability Target; 6.6 GW Shortfall Could Trigger Reliability Backstop Auction

-- Utility Dive: FERC Members Raise Alarms About PJM Failure To Meet Reliability Target; Next Load Forecast Could Be Significantly Lower Due To Stricter Vetting Of Data Center Projects

-- Bloomberg: Pressure Mounts To Fix PJM Grid As Electricity Costs Hit New Highs

-- Reuters: Prices In PJM Power Auction Hit New Record, Signaling Higher Utility Bills Ahead

-- Bloomberg: Latest PJM Power Auction Set To Deepen Affordability Concerns

-- Bloomberg: New York Utility Says Queue For A.I. Data Center Power Users Has Tripled

-- KSDK: A.I. Data Centers Are Sucking Illinois’ Power Grid Dry, Official Report Warns [PJM Service Area]

-- WGEM: Illinois State Regulators Warn Of Impending Energy Shortfalls As PJM Capacity Prices Rise Again

-- AP: FERC Orders PJM To Allow A.I. Data Centers To Plug Right Into Power Plants In Scramble For Energy

-- PA Capital-Star: FERC Says More Clarity Needed On How A.I. Data Centers Connect To Power Sources

-- Utility Dive: FERC Orders PJM To Craft New A.I. Data Center Colocation Connection Rules

-- Reuters: FERC Directs PJM To Set New A.I. Data Center Rules On Direct Connection To Power Plants

-- Utility Dive: Electric Utility Large Load Tariffs Could Streamline Interconnection By Shrinking Queues, Report [Now, Anyone With An Acre Of Land For A Data Center Is Putting In An Interconnection Request]

-- Post-Gazette - Laura Legere: US Energy Secretary Touts $1 Billion Taxpayer Loan To Restart Undamaged Three Mile Island Nuclear Reactor To Feed Microsoft A.I. Data Centers

-- PJM Outlines Long-Term Electric Transmission Plan In FERC Filing

-- KDKA: PA Lawmakers Exploring How To Regulate A.I. Data Centers, Which Drive Up Resident’s Utility Bills

-- Altoona Mirror: Groups Urge Shapiro To Dial Back Support For A.I. Data Centers [PDF of Article]

-- Tribune-Democrat Guest Essay: Pennsylvania Must Be Prepared To Meet Energy Challenges After RGGI - By Tom Gilbert, PA Environmental Council  [PDF of Article]

-- TribLive Guest Essay: New Energy Sources Needed Now To Combat Soaring Electricity Prices - By Kate Harper & Conor Lamb, Energy Future PA

-- Morning Call/Inquirer: Poll: How Pennsylvanians Feel About A.I. Data Centers: 70% Concerned About Water Use; 71% Concerned About Electricity Use

-- Post-Gazette: Survey Says Pennsylvanians See The A.I. Revolution As A ‘Significant Threat To Humanity’

-- Chesapeake Bay Journal: Maryland Legislature Overrides Governor’s Veto Of Bills To Study Costs Of Greenhouse Gas Emissions In MD; Economic, Energy, Environmental Impacts Of A.I. Data Centers, Setting Up State Energy Office

[Posted: December 17, 2025]

12/22/2025