Capacity market prices signal the cost of ensuring adequate generation resources for future demand. When these market prices rise, it reflects tighter capacity and potential scarcity, leading to higher retail electricity rates. Lower capacity prices indicate surplus capacity and can relieve upward pressure on rates.
/ Past Year Trend for Capacity Market Prices
Capacity market prices have surged over the last year. The PJM Base Residual Auction for the 2024/2025 delivery year cleared at roughly $30 per megawatt‑day, but the 2025/2026 auction price jumped to about $270 per megawatt‑day. Prices climbed further to around $329 per megawatt‑day for the 2026/2027 delivery year. These sharp increases in capacity costs are ultimately passed through to customers and therefore pressure electricity rates upward.
