2025/2026 CAPACITY AUCTION RESULTS
The recent PJM capacity auction resulted in a significant price surge to $269.92 per megawatt-day, nearly tenfold last year’s increase. This affects 135,684 MW of capacity for June 2025-May 2026, with a diverse mix of gas, nuclear, coal, and renewables. Higher demand and market reforms are driving these costs.
Businesses across the PJM grid are in for a shock. They should prepare for higher electricity bills and consider energy efficiency measures. Learn more >>
Your TPI Consultant is prepared to help you navigate this development. We understand this may impact your business operations and are committed to helping you navigate these changes. Please reach out for more information and resources to help you manage your energy usage and costs effectively.
Solutions are available to reduce your usage through TPI projects like LED lighting, Controls, and our PowerHouse electrical conditioning solutions.
THINGS TO REMEMBER ABOUT CAPACITY CHARGES
- Capacity does not affect the price of electricity. The energy market is still measured on a supply-and-demand basis. Capacity is a separate charge wrapped into your electricity rate or passed through as a separate line item.
- Even existing contracts that run through 2025/2026 will see the increased capacity costs passed through as a change of law or regulation, which all contracts have under exemption clauses.
- The much higher capacity costs are a significant challenge, but they also present an excellent opportunity to explore efficiency projects. While there may be no way to avoid paying the higher capacity cost, you can take control of the situation by reducing your usage through projects like LED lighting, Controls, PowerHouse, etc., thereby mitigating the impact and potentially saving costs.
NATURAL GAS POWER BURN DEMAND
• LNG exports dropped as Hurricane Beryl passed through and shut down the Freeport LNG facility. That facility is back up and running, and LNG exports are being shipped again.
• Seasonal maintenance issues have cut about 2 billion cubic feet of LNG exports in the last few weeks. That 2 Bcf is staying domestic and is helping to keep prices low.
• Not including the Mexican NG pipeline, which exports about 6-7 Bcf/d, the U.S. will export upwards of 20 bcf daily by the end of 2030. Right around the corner.
6-10 DAY AND 8-14 DAY OUTLOOK
WEATHER DEMAND
•July 21, 22, and 23 each set a record for the hottest day in recorded history, one right after another. We already had the hottest June in recorded history this year, and July may also break a record.
NYMEX NATURAL GAS CALENDAR STRIPS
PJM WEST HUB INDEX VS. FORWARD
PJM WEST HUB FORWARD POWER
NATURAL GAS PRODUCTION
• Production continues to rise as it is now back above 102 Bcf/d. This may be temporary as prompt month prices continue to hover below the $2.00 mark.
• Injections continue to historically lag behind past years as gas demand ramps up in the summertime due to higher demand.
• With pricing for August and September hovering below $2.00, now is an excellent time to explore a gas agreement and even look at a NYMEX+ strategy.
