It’s a fact: You’re not the only business whose electricity costs went up this year.
Rising energy bills are the new reality if you operate in the PJM region — the geographic and operational footprint, including 13 states and the District of Columbia, managed by PJM Interconnection.
The reason is structural: the cost of grid reliability has spiked. PJM, which manages the grid for 65 million people, runs a capacity auction to pay generators to stay available. The PJM auction increased prices due to several factors: increased demand for electricity, supply shortages due to retiring power plants, project backlogs that slowed new renewable energy generation, and tight reserve margins on the grid.
This isn’t a temporary surge. It’s a systemic change that CFOs can’t afford to overlook. The financial effects of these auctions are already being factored into energy rates for 2025 and 2026.
ePro+ explains how the PJM auction adds a new level of unpredictability that needs to be planned for and handled carefully.
The PJM Capacity Auction works like insurance: generators are paid to stay ready, not just for the electricity they produce. These capacity costs support grid reliability and are passed through suppliers to your utility bill.
In the most recent auction, the cost of capacity went up by almost 800%, from about $29 per megawatt-day to $270 per megawatt-day. These costs are now a bigger part of the total energy costs in the PJM region.
Several state leaders and PJM’s board have said that they are worried that this cost trend can’t last. Some states are even thinking about making changes or possibly leaving PJM if the market can’t stabilize reliability without raising costs even more.
“For CFOs, the main point is clear: the cost of grid reliability is now a big factor
Phil Ferber, Senior Director, ePro+ at SpyGlass
in how much their operations cost.”
The most recent capacity auction by PJM showed how unstable the region’s power balance has become. The auction cleared 134,311 MW— just 139 MW above the reliability requirement.
To put that in perspective, 139 MW is enough electricity to power about 100,000 homes for a day. That’s a razor-thin margin that remained above the reliability requirement. On a grid serving 65 million, a single storm or outage could trigger a shortage.
The reasons for the spike in usage are:
The result? PJM’s reserve margin fell from 20.4% last year to only 18.6% this year. This is a big drop that shows supply is getting tighter and costs are going up.
Government officials across the PJM region are calling for changes to the market, quicker approvals for interconnections, and more options for handling big new loads. Because of the rising tension between reliability, policy, and cost, grid volatility is no longer just a theory; it’s a reality.
PJM projects that by 2030, peak load demand will rise by 32 GW, which is enough to power 20 million more homes. PJM says that without faster infrastructure growth or changes to the rules, there could be capacity shortages by the
Utility Dive
delivery year 2026–2027.
All PJM customers will feel the impact, but small businesses, schools, and manufacturers are most exposed. They face limited procurement leverage and tighter margins, so even small cost increases can affect budgets significantly.
Electricity bills are expected to go up 1–5% across the board, with some PJM zones seeing increases of up to 29% starting in mid-2025. For industries that use a lot of energy, like heat treating, machining, or food processing, these increases mean tens or even hundreds of thousands of dollars that weren’t planned for.
And since the PJM Capacity Auction sets prices years in advance, these costs are set in stone, no matter what happens with usage in the future.
In short, your grid reliability cost will go up even if your energy use doesn’t.
This is a time for proactive financial strategy, not reactive budgeting. Top CFOs are already working on ways to measure and manage their exposure to costs related to grid reliability. Their energy health checklists include:
Each of these steps gives CFOs the visibility and control they need to make decisions about energy based on data and defend their budget assumptions in markets that are changing quickly.
Grid reliability is no longer just a utility concern — it’s a financial risk. CFOs can turn it into a managed, strategic cost with the right planning.
The business world will always have energy volatility. But if you do the right research, buy at the right time, and work with the right strategic partners, it doesn’t have to be a financial shock.
Let’s talk about how the costs of grid reliability are affecting your predictions for 2025–2026 and what you can do now to get your energy budget back under control.
