Electricity prices are set to increase next summer as a result of higher electric generation costs in regional grid operator PJM’s capacity auction. However, almost every resource type cleared more power in the auction — more coal, gas, nuclear, solar, and wind.

Why the increase in electricity prices if electric supply is steady? This memo from OMA energy engineering consultant Runnerstone found that the cost increases are primarily due to auction rule changes made by PJM, and power plant owners withholding their generation from the lucrative auction, rather than supply and demand fundamentals.

Runnerstone shows that 183 gigawatts of connected generation cleared the high-priced auction, an increase from the previous year. The cost to customers will be in the billions of dollars, according to PJM’s Independent Market Monitor. 10/17/2024