Energy bills likely to tick up again in 2026 after electricity auction clears at maximum price

by Christine Condon, Maryland Matters
July 23, 2025

Consumers in a 13-state region that includes Maryland could see their electric bills rise another 1.5% to 5% starting in the summer of 2026, after a key electricity auction cleared at its maximum price Tuesday.

PJM Interconnection, the regional electric grid operator serving Maryland, uses the competitive auction process to procure electric capacity from generators. The auction’s clearing price generally trickles down to consumers, as one segment of their utility bill.

And this year’s auction cleared at a record-high price for the second year in a row. It would have soared even higher, if it weren’t for a cap instituted by PJM at the request of Pennsylvania Gov. Josh Shapiro (D), which was backed by Maryland Gov. Wes Moore (D).

The clearing price equalled the cap, set at $329.17 per megawatt-day. Without the ceiling, PJM estimates it would have reached $388.57 per megawatt-day.

This year’s auction means that consumers will pay a total of $16.1 billion for electricity capacity during a one-year period that begins in June 2026. The previous auction cleared at a record $14.7 billion, an unprecedented increase compared to the year before, when the auction closed at $2.2 billion.

What drove that historic increase? PJM says that an increase in energy demand, chiefly from data centers, was to blame, alongside reductions in energy supply as old fossil fuel power plants retire.

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For 2026, power demand in the PJM grid is projected to increase by 5,400 megawatts, with data centers causing a “majority” of the jump, said Stu Bresler, PJM’s executive vice president of market services and strategy.

But Bresler said that PJM saw an “encouraging” increase in the amount of new power generation in this auction, for the first time in the past four auctions. Several generators also reversed plans to retire, instead bidding on the auction.

“We’re pleased to see the reversals of retirements because that’s the kind of thing we need, ” Bresler said.

The auction resulted in an energy mix that is 45% natural gas, 21% nuclear, 22% coal, 4% hydropower, 3% wind and 1% solar.

In addition to the implementation of the cap, this year’s auction also included a policy change with a “significant” impact for the Baltimore area, Bresler said.

This year, PJM included the electric capacity that will be generated by Anne Arundel County’s Brandon Shores coal plant and the H.A. Wagner oil plant, which were both compelled to stay online beyond their planned closure dates because of concerns about power supply. PJM decided to change its policy of excluding those resources from the auction after outcry from ratepayer advocates, including Maryland’s Office of the People’s Counsel.

The Maryland OPC has estimated that the 2024 exclusion cost PJM customers as much as $5 billion, and has asked the Federal Energy Regulatory Commission to return that money to consumers.

Last year, partially because of the Brandon Shores issue, the Baltimore Gas & Electric territory saw a higher auction clearing price than the rest of the PJM territory: about $466 per megawatt-day. This time, the auction clearing price was the same for all utilities in the PJM territory.

But Bresler said Tuesday that BGE ratepayers aren’t likely to see rates go down as a result of this year’s lower auction price. That’s because last BGE received a credit (for importing power from lower-priced regions) which lowered the actual clearing price to about $305 per megawatt-day. So this year’s $329 price would still be an increase for BGE customers.

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For some Maryland politicians, the 2024 auction was a gut-check, and it was part of the reason that leading lawmakers opted to pursue energy legislation this year, passing a package of bills dedicated largely to bolstering power supply by hastening new projects. Legislators were also spurred to action by consumers’ high natural gas bills, which peaked in the cold winter months as lawmakers convened in Annapolis.

The bill increases from the 2024 auction will take effect at different times for Maryland customers, depending on their utility territory. Pepco and Delmarva Power customers will see increases in August, Potomac Edison customers will face increases in October and BGE customers will see increases this fall, before rate decrease for the colder winter months. SMECO customers saw the rate increase beginning in June.

Ratepayer advocates have argued that the auction cost isn’t increasing solely due to supply and demand, but due to policies at PJM. They’ve cited a backlog in PJM’s queue for new power generation to come online, particularly renewable energy projects.

PJM has countered that, within 18 months, it expects to clear the bottleneck in the queue, which was engineered in an era of large power plants, as opposed to a wider array of smaller projects featuring wind turbines, solar panels, battery storage and other technologies.

PJM has also created a one-time fast-track for 51 “shovel-ready” energy projects to connect to the grid by 2031, which includes two projects in Maryland. The majority of the projects will upgrade existing existing natural gas, nuclear, coal and onshore wind facilities, but the list also includes a dozen new power projects, including gas, battery and nuclear facilities.

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Maryland Matters is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Maryland Matters maintains editorial independence. Contact Editor Steve Crane for questions: editor@marylandmatters.org.