Originally published on LinkedIn, July 29, 2026.
The price of keeping America’s largest power grid supplied has climbed more than tenfold in two years.
For the 24/25 delivery year, a megawatt-day of capacity cleared around $29.
For 25/26 it reached $270. For 26/27, it hit $329 and stopped there because it ran into a federal price ceiling.
The two auctions after that, held last December for 27/28 and this July for 28/29, cleared at the ceiling as well, at $333 and $325.
That’s the first half of the story. The second half is worse.
Even pinned at the price ceiling, the last two auctions could not buy enough power. In December, the grid came up about 6,500 megawatts short. In July, about 6,800.
The shortage got worse and almost no new plants got built. Without the ceiling, PJM figures the July auction would have cleared at $555 per megawatt-day and cost close to $30 billion.
Even then it would not have filled the gap.
The auction does not buy electricity. It buys the promise of it. A power plant pledges to be available in a future year, names a price for standing ready, and gets paid whether it ever runs or not. PJM buys the cheapest pledges until it has a cushion above the demand it expects, and those payments are added to everyone’s bill. Capacity has long been a small slice of a typical household’s electricity bill, by most estimates around a tenth. It is now the fastest-rising part.
The culprit, of course, is data centers. Their projected demand is the single largest reason the region came up short, and the bill falls on 67 million people across thirteen states and Washington.
Record prices did little to attract new supply. The July auction drew 525 megawatts of it, and 208 of that was upgrades to plants that already exist. It was the smallest new haul in years, down from 774 megawatts in December. A data center can be built in two years. A power plant, its fuel supply, and the wires to connect it usually cannot. So the record prices mostly went to plants already standing.
PJM’s own market monitor said data centers accounted for $6.3 billion of the $16.4 billion the July auction will charge to customers, about 38 percent. In the auction two years ago, when prices first jumped, the monitor tied about $9.3 billion of the rise to data-center demand, most of that year’s roughly $14 billion capacity bill. Without those data centers, that auction would have run near a third of what it did. Across the last four auctions, data centers added about $29 billion of $64 billion in total charges. The monitor’s own recommendation is to pull data centers out of the shared auction and make them buy their power in a separate one.
Consumer price increases have already started, and the clearest place to see it is New Jersey. When the state held its annual electricity auction in early 2025, its utility board told residents their bills would rise between roughly 17 and 20 percent that June, more than $20 a month for a typical home, and named the main cause: PJM’s capacity auction.
Consumer price increases land everywhere on the grid but vary depending on your state and utility. The next increases are forecast to be larger still.
The Natural Resources Defense Council projects that by 2028 the average family across the region will pay around $70 more per month due to data-center growth.
Almost everyone now agrees data centers should pay their own way. Working out how has been the hard part.
In January, the White House and the governors of all thirteen PJM states signed a statement of principles saying the cost of data-center growth should fall on data centers, not the public.
States have gone further on their own. By this spring, by the Edison Electric Institute’s count, twenty-three states had approved at least one large-load tariff. Virginia’s regulators approved a rate class for Dominion’s biggest customers that requires fourteen-year commitments and payment for most of the capacity they reserve whether they use it or not. Oregon passed a law creating a separate class for large data centers, first applied to Portland General Electric. But federal regulators have not settled a fundamental question: a shared reliability auction spreads its cost across everyone by design, so how do you create a way to send the bill to the customer who caused the shortage?
So the argument over the electric bill is more than just who pays for the power being used; it’s who pays for the scarcity?
For anyone underwriting one of these projects, the power is the first thing to establish. A finished interconnection study is not a service agreement. The question is whether the power is actually committed in a contract: how much capacity is committed, when the utility must deliver it, who pays for the upgrades that remain, and whether any of this survives a sale. In a grid that cannot buy enough power at any price it is allowed to pay, the contract is the only thing that provides answers.
One last question comes to mind: Who is paying to build all of these new data centers, and who takes the loss if the demand for them never arrives?
So far, it looks like we all do— the working public — whether we know it or not.
The money increasingly does not sit on the tech company’s balance sheet. Meta’s largest campus, in Louisiana, is held in a joint venture where it owns only one-fifth. A Blue Owl fund owns the rest, most of it borrowed, and Meta has signed a lease measured in a few years against debt measured in decades. Blue Owl, the manager, collects its fee whether the campus ever earns a dollar. The risk lives in the fund.
And the fund is other people’s money: public pensions, insurers, and ordinary investors reached through wealth managers, in both the equity that takes the first loss and the debt stacked above it. If AI demand doesn’t hold, guess who is holding the bag?
That is a different article. The grid does not care who financed the building or how it was structured. It cares only whether the megawatts show up on the day they were promised.
Daniel Sexton is Managing Partner of Vanguard Industrial Partners, an industrial sponsor and design-build developer. He founded Arkvera, a lower-middle-market M&A broker that represents only the deals it believes will outlast the cycle.
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Notes
[1] 2024/25 RTO clearing price of $28.92/MW-day. PJM Base Residual Auction results for the 2024/25 delivery year; figures for the successive auctions are compiled in IEEFA’s analysis of PJM capacity prices.
[2] Successive RTO clearing prices: 2025/26 at $269.92 (auction held July 2024); 2026/27 at $329.17 (at cap; released July 22, 2025); 2027/28 at $333.44 (at cap; released December 17, 2025); 2028/29 at $325.00 (at cap; released July 14, 2026). PJM Inside Lines and PJM BRA press releases and reports.
[3] Shortfalls against PJM’s reliability requirement: 6,516 MW for 2027/28 and 6,831 MW for 2028/29. PJM COO Stu Bresler referenced roughly 6,500 MW for the prior auction. PJM 2027/28 and 2028/29 BRA reports; E&E News.
[4] The cap is stated as $256.75/MW-day in installed-capacity (ICAP) terms and divided by the accreditation of PJM’s reference resource to convert to unforced-capacity (UCAP) terms. That accreditation rose from 77 to 79 percent, lowering the UCAP cap from $333.44 to $325.00 ($256.75 ÷ 0.79 = $325). Modo Energy; Stanwich Energy.
[5] PJM’s own uncapped simulation of the 2028/29 auction cleared at roughly $555/MW-day and would have cost about $29.7 billion. PJM simulation, as reported by Modo Energy and E&E News.
[6] The 2028/29 auction procured 138,318 MW of UCAP for a total cleared value of about $16.4 billion, serving more than 67 million people across 13 states and the District of Columbia. PJM release, July 14, 2026.
[7] New generation and uprates totaled 525 MW UCAP in the 2028/29 auction, down from 774 MW UCAP in the 2027/28 auction. PJM 2028/29 and 2027/28 BRA releases and reports.
[8] Data centers accounted for $6.3 billion of the $16.4 billion in 2028/29 charges, about 38 percent. Monitoring Analytics (Joseph Bowring), reported by Utility Dive.
[9] For the 2025/26 auction, the market monitor tied about 63 percent of the price increase, roughly $9.3 billion, to data-center demand, against a total capacity bill of about $14.7 billion. Monitoring Analytics 2025/26 analysis; IEEFA; NRDC.
[10] Across the four auctions from 2025/26 through 2028/29, data-center-driven charges totaled about $29.4 billion of $63.6 billion in total charges, roughly 46 percent. Monitoring Analytics, reported by Utility Dive.
[11] The market monitor’s recommendation is to remove data-center load from the shared capacity auction and procure it through a dedicated auction. Utility Dive.
[12] New Jersey’s Basic Generation Service auction results, certified February 1, 2025, projected residential bill increases of 17.23 to 20.20 percent beginning June 1, 2025, more than $20 a month for a typical home. The Board of Public Utilities attributed the increases mainly to the July 2024 PJM Base Residual Auction. New Jersey Board of Public Utilities order.
[13] NRDC projects that by 2028 the average household will pay around $70 a month more because of data-center growth, part of as much as $163 billion in added capacity costs through 2033. NRDC.
[14] The Statement of Principles Regarding PJM was signed January 15, 2026 and announced the following day by the White House National Energy Dominance Council and the governors of all 13 PJM states. It is non-binding. U.S. Department of Energy.
[15] By spring 2026, per the Edison Electric Institute, 23 states had approved at least one large-load tariff. EEI, reported by Environment+Energy Leader.