As noted in our 2027 PJM capacity article, the 2024 PJM BRA revealed a staggering increase in capacity costs. The article highlighted the growing challenges of grid reliability amid the transition to renewable energy and increases in demand from AI. The 2024 auction results indicated a nine-fold increase in costs, creating significant implications for consumer electricity rates. These implications materialized in 2025, effectively creating substantially higher rates in the PJM market.

The Latest Auction Results

The latest July 2025 BRA is a continuation of this upward momentum that further impacts consumer electricity rates. While the latest auction was not the staggering increase we saw in 2024, it still produced further increases throughout the region.

• The PJM 2026/2027 Base Residual Auction (BRA) secured 146,244 MW of unforced capacity generation (UCAP) to meet demand across 13 states and the District of Columbia.

• The price came in at the FERC-approved cap of $329.17/MW-day (UCAP) for the entire PJM footprint.

• This compares with $269.92/MW-day for the 2025/2026 auction for the RTO.

• This could equate to an additional 5% increase in consumer supply costs, on top of the 25% impact from the July 2024 BRA.

Why the Continued Increase?

Data centers in PJM have been largely concentrated in Virginia, the largest data center market in the world, where Amazon has the largest footprint. Additionally, data centers are spreading to other zones, particularly in Ohio and Maryland.

Projected data center growth is expected to run into constraints due to the pace at which utilities can build infrastructure — typically several years longer than the time required to build a data center.

Looking Ahead

The next Base Residual Auction for the 2027/2028 Delivery Year is scheduled for December 2025, as PJM works toward resuming its three-year-forward planning cycle.

Expectations are for the auction to clear at the price cap ($329.17/MW-day) due to:

• Anticipated tight supply

• Reduced eligible capacity

• Difficulty connecting new generation to the grid

• Continued decrease in eligible capacity

Analysts expect high prices to persist under these conditions.

Minimizing the Impact

It is important to understand how organizations can minimize this impact to their bottom line. The key to reducing these additional costs is peak load management and energy efficiency.

At Freedom Energy, we provide the Peak Notification Program, which:

• Reduces demand-based charges (capacity and transmission costs) by curtailing an organization’s load during peak demand hours

• Bases capacity costs on five critical peak days in PJM used to formulate a cap tag

• Enables significant cost reductions through proper management and curtailment

Additionally, we work with partners to provide Peak Demand Response, allowing organizations to:

• Generate revenue through participation in load response programs

• Further reduce exposure to high capacity charges

Please contact a representative at Freedom Energy to review options for minimizing your organization’s exposure to rising PJM capacity costs.