PJM Energy Markets Competitive, but Capacity Costs Surge

Independent Market Monitor Joseph Bowring reported that real-time load-weighted average prices jumped 40.2 percent to $72.54 per MWh compared to the same period last year. Transmission constraints accounted for nearly half of this increase, as total wholesale power costs rose 50.3 percent to $114.50 per MWh. Bowring specifically identified the inclusion of data center load in capacity markets as a primary driver of these price hikes, recommending that these facilities be required to fund their own new generation to shield existing customers.

Beyond capacity concerns, the report highlights a massive shortfall in congestion revenue returns. Customers were underpaid by $2.2 billion during the 2025/2026 planning period, marking the largest such deficiency on record. Since 2011, this design flaw in the Financial Transmission Rights market has resulted in $7.1 billion in lost congestion revenue for consumers. While generation from solar and natural gas increased, the market’s reliance on complex pricing mechanisms continues to spark debate over whether current rules effectively balance participant incentives with consumer protection.