The Federal Energy Regulatory Commission (FERC) has officially approved a temporary “price collar” for PJM Interconnection’s upcoming capacity auctions.
This move sets a price ceiling of $325 per megawatt-day and a floor of $175 per megawatt-day for the 2026/27 and 2027/28 auctions.
Why It Matters
Capacity auctions are how grid operators ensure there’s enough electricity supply to meet future demand. Power plants bid into these auctions, and the winning bids help determine how much money these facilities will receive just for being available when needed.
In the last auction, the price skyrocketed to $270/MW-day—roughly nine times higher than the year before. That dramatic increase raised eyebrows, especially in Pennsylvania, where Governor Josh Shapiro filed a formal complaint warning of higher utility bills for everyday consumers.
Without this new collar in place, the upcoming auction could have topped $500/MW-day, placing even more pressure on ratepayers.
Balancing Short-Term Relief with Long-Term Supply
This new pricing band is designed to offer more stability for both sides of the equation:
- Consumers benefit from avoiding runaway capacity prices.
- Energy providers gain predictable revenue that supports continued operation and planning.
Still, not everyone is convinced. Critics argue that putting artificial limits on auction prices could send the wrong signals to energy developers. If companies don’t expect a fair return on investment, they may hold off on building the next generation of energy infrastructure.
But FERC unanimously approved the measure, citing current market conditions—including rising demand, power plant retirements, and project delays—as serious enough to warrant intervention.
What This Means for You
If you live in a PJM region like Pennsylvania, expect higher electricity capacity costs than in past years—but lower than they could have been without this new rule. With supply tightening and demand rising, the cost of reliability is increasing.
This is yet another reminder of why America must strengthen its domestic energy supply. At American Fossil Energy, we believe a reliable, affordable grid starts with investing in our natural resources—coal and natural gas. These baseload power sources remain essential for keeping the lights on and the economy running, especially when demand surges or renewables fall short.
Looking Ahead
FERC’s decision is just one of several recent reforms aimed at improving grid reliability and speeding up the interconnection of new energy sources. Whether these efforts will ease long-term price pressure remains to be seen.
In the meantime, one thing is clear: America’s energy future must be built on a foundation of strength, certainty, and common sense—and that means supporting the fossil fuel producers that have powered our country for generations.
