Businesses across the Northeast are facing a perfect storm when it comes to electricity costs. From extreme weather events that strain the grid, to global geopolitical tensions affecting fuel supply and prices, and a rapidly changing energy landscape, there are more factors than ever raising the cost of power. These challenges can make it increasingly difficult for businesses to manage energy expenses.
Amid these outside influences, a new and significant development is about to hit utility customers in states served by the PJM Interconnection, like Maryland, New Jersey, Ohio, Illinois, and Massachusetts. A surge in capacity costs within PJM is set to drive up utility bills, creating both challenges and opportunities for commercial business owners.
What’s Driving the Increase in Electricity Rates?
The PJM Interconnection, which manages the electric grid and wholesale electricity market for much of the Northeast and Midwest, recently held its annual capacity auction. The results were pretty shocking: capacity prices for the 2025/2026 delivery year soared to $269.92 per megawatt-day for most of the region, up from just $28.92 the previous year. In some areas, like Baltimore, Maryland, prices spiked even higher, reaching $466.35 per megawatt-day.
Capacity charges are a key part of every utility customer’s bill in PJM. They ensure there’s enough power available to meet demand, but until now, they’ve typically accounted for a small percentage of a customer’s supply rate. With the new prices, that share is expected to jump significantly, translating into larger increases for both residential and commercial customers alike. Due to typical increased power use, this could mean thousands of dollars in additional annual costs for many businesses, starting as soon as June 2025.
Several factors are coming together to drive up electricity rates in PJM, including the retirement of older power plants, rising demand forecasts, market reforms to improve grid reliability, and more. These combined circumstances have significantly stressed the supply-demand balance, resulting in much higher customer capacity prices.
You can read a detailed breakdown of these factors in the full PJM 2025/2026 Base Residual Auction report.
Why Solar Makes More Sense Than Ever
As utility rates climb, solar energy is emerging as a powerful tool for businesses to reduce financial risk. Here’s why:
- More Predictable Energy Costs: By generating your electricity onsite, you can shield your business from market volatility, leading to a more predictable baseline, making it easier to forecast and manage your energy expenses.
- Sustainability and Brand Value: Beyond budget certainty, solar supports your ESG goals, which can enhance your brand and appeal to customers.
The Bottom Line
Rising capacity costs in the PJM region are set to make electricity bills significantly more expensive for businesses throughout the Northeast. While this presents a challenge, it also creates a compelling case for investing in more solar. By taking control of your energy, your business can avoid the brunt of future rate hikes, improve your bottom line, and position yourself as a leader in sustainability.
If you’re considering solar, talk to our Energy Experts about our Connected Microgrid® solution. With this solution, Catalyst Power® builds, owns, and operates the system for you, so there are no upfront costs or maintenance worries. Now is the time not only to make sustainable choices, but also to make a smart business move.
