PJM Interconnection, the grid operator for 13 states and Washington, DC, announced on July 14 that its capacity auction for 2028-29 cleared at $325 per megawatt-day — the price cap set by federal regulators — for the third auction in a row. The total bill is $16.4 billion, and PJM’s independent market monitor attributes roughly $6.3 billion of it to data centers, the American Public Power Association reported.
The number that should worry people is not the price. It is what the price bought.
At the maximum rate the market is legally allowed to pay, the auction attracted 525 megawatts of new generation and plant upgrades — against a shortfall of 6,831 megawatts. That is roughly a thirteenth of the gap. Worse, most of that 525 was not new construction at all: 208 megawatts came from uprating plants that already exist. A capacity market runs on a single premise, that high prices summon new supply. Three consecutive auctions at the ceiling have now tested that premise and it did not hold.
What data centers did to the bill
PJM procured 138,318 megawatts and still came up short of its own reliability requirement, landing at a 14.7% reserve margin against a 20% target. It plans to ask federal regulators to approve a special “Backstop Procurement” to cover the hole.
For scale on the price: $325 per MW-day is more than eleven times the $28.92 the 2024/25 auction cleared at. Sixty-seven million people are on the other end of that.
Joseph Bowring, president of Monitoring Analytics and PJM’s independent market monitor, has drawn the obvious conclusion and says that load should simply be taken out of the auction.
“This would permit the data centers to have access to capacity through a market mechanism and ensure that data centers pay for their own capacity.”
That is not a rhetorical flourish from a critic. It is the position of the office PJM pays to watch its own market.
What PJM says
David Mills, PJM’s president and CEO, framed it as arithmetic rather than failure. “These auction results show that demand for electricity continues to grow faster than electricity supply,” he said.
He acknowledged the consequence directly. “At the same time, PJM recognizes how this supply-and-demand imbalance impacts the reliability of the system and costs for consumers,” Mills said. “We are working with government and industry leaders on multiple fronts to restore that balance by bringing on new generation as fast as possible.” PJM’s own account of the auction is in its results release.
“As fast as possible” turned out to be 525 megawatts.
Who pays, and for how long
Clara Summers of the Citizens Utility Board did not soften it. “We’re in a situation right now where there is this obscene, really fast growing demand from data centers,” she said. Consumers, she added, “can expect their bills to be elevated for the foreseeable future at about the same amount.”
In her organisation’s own words, the region’s “continued foot-dragging is failing 67 million customers who are now suffering a years-long electricity price spike.”
Julia Kortrey, director of strategic initiatives at Evergreen Action, put a date on the relief. Prices are “pretty baked in at this point,” she said. “We probably won’t see relief from anything that PJM can do to make it better until the 2030s.”
That is the part households will feel. The auction sets capacity costs for a delivery year starting in June 2028, so the decision has already been made and the electricity bills arrive later.
The 13 states holding the bag
The footprint runs across Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia and West Virginia, plus the District of Columbia. Northern Virginia alone is one of the densest concentrations of server capacity on earth.
Some states are no longer waiting for the market to sort it out. New York froze approvals for new AI server campuses outright — a blunt instrument, but a faster one than a capacity auction.
The question federal regulators now face
PJM’s fix is procedural: a backstop purchase, plus a framework for connecting large new loads, aimed at September. Bowring’s fix is structural: take the load out of the market and make it buy its own power.
Only one of those addresses why a price ceiling produced 525 megawatts. If a market at maximum price cannot call forth supply, the shortfall is not a pricing problem, and another auction at $325 will not solve it either.
