by Steve Haner
The regional electricity marketplace that serves Virginia, PJM Interconnection, was shocked (pardon the pun) by last yearโs high price auction to secure future excess generation capacity, needed for days of tight supply. In response, several changes were made to the process to lower the price faced by the member utilities and their customers.
It didnโt make much difference. For the PJM region, the bid price for future firm generation capacity has settled at $329.17. Last year, the price was set at $269.92 for most of the PJM territory. The new price is an improvement for the Dominion Energy Zone, which reached $444.26 in the 2024 auction, and for the Baltimore Gas and Electric Zone, which hit $466.35. For that price, the generator promises to make available one megawatt of generation for the entire day.
The prices from the summer 2024 auction are now being paid by the PJM load serving entities, including Virginians. The auction looks forward by a year, and the new $329.17 price will apply for contracts starting in July 2026. Just two years ago, that price was less than $30 per megawatt day. Compared to last year, the pressure on Dominion’s part of Virginia dropped but utilities in Pennsylvania, New Jersey and other parts of PJM are looking at even higher costs, including those in Western Virginia outside Dominion Zone.ย ย
One of the reforms imposed after the 2024 auction was to set an artificial cap on the price. The auction that started last week went right up to that pre-agreed maximum price of $329.17. Without the cap, it likely would have been higher. Does that indicate the rules interfered with finding the correct price?
The underlying supply and demand mismatch that is driving this should concern all energy customers in the PJM region. This is yet another sign that PJM is losing too much of its dispatchable coal and gas generation, although another of the reforms applied was to keep open several plants that were otherwise going to close. Even with that extra supply, prices stayed high. Like the price cap, there is an economics message in that, too.












