AI Boom Keeps Key Power Costs at Record on Largest US Grid
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The payouts to generators for the year starting June 2026 topped last year's record $14.7 billion, according to PJM Interconnection LLC, which operates the grid stretching from the Midwest to the mid-Atlantic. That puts the capacity price per megawatt each day at $329.17 from $269.92.
The shares of Constellation Energy Corp. and Talen Energy Corp. increased in late trading in New York on Tuesday.
Data centers for AI are driving the biggest surge in US electric demand in decades, leading to higher residential utility bills. That's a key reason why PJM's auction — once only tracked by power traders and plant owners — has become closely watched by politicians and consumer advocates.
This is the first auction that included both a price floor and cap, setting the range at $177.24 to $329.17, the level reached in this auction. Last year's 600% jump in capacity prices set off a political firestorm, resulting in PJM reaching a settlement with Pennsylvania Governor Josh Shapiro to essentially cap gains for two years and make auction prices more predictable after wild swings in recent years.
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Despite the increase in costs across the grid, the price cap trimmed costs for consumers who saw the biggest hikes in the last auction. Exelon Corp.'s Baltimore area utility reached a $466 last time, while Dominion Energy Inc.'s Virginia territory came in at about $444.
Payouts to generators stayed at high levels due to surging demand from big data centers coming online swiftly, said Jon Gordon, policy director of non-profit clean energy advocacy Advanced Energy United. New facilities are consuming as much power as towns or small cities, coinciding with a wave of older power plants shutting down and lagging investment in new supplies and grid upgrades, he said.
The per-megawatt price exceeding the 2024 auction is bullisha for independent power producers including NRG Energy Inc., Talen Energy, Constellation Energy and Vistra, Barclays analyst Nick Campenella had forecast. These generators have spent more than $34 billion so far this year on deals to mainly buy up power plants fueled by natural gas to feed the AI boom especially in PJM.
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