Eastern U.S. Grid Management Costs Point to Higher Utility Bills

The grid operator serving 15 Mid-Atlantic and Midwest states has secured agreements with resources such as power plants to meet reliability requirements for supplying the region’s utilities in 2025-’26. PJM Interconnection will need to pay nine times more per kilowatt (kW) than in the current 2024-’25 planning year. This prompted notification to TRSA from Environ Energy, TRSA’s energy management and sustainability Business Solutions Partner.

The huge capacity cost increase in the PJM region could translate for business customers to annual electricity costs 8 to 10 percent higher than today. But a host of customer use patterns are among the factors that will ultimately determine this impact; for example, how much electricity is used and how much of it takes place during peak hours or seasons. To get the best estimate of how PJM’s or any grid operator’s costs trickle into a user’s electricity bill, businesses are urged to seek consultant analysis of their usage patterns.

Paul Lavallee, Environ market manager for TRSA, expects customers to begin seeing the impact when the increase takes effect in June 2025, regardless of whether you buy your energy from your local utility or from a third-party electricity supplier. The impact is likely to be difficult to discern on an electric bill. “The capacity cost increases will impact all customers in the region, and by better understanding how, they can budget and plan more effectively,” he explained.

Grid operators serving other regions are facing similar capacity cost challenges. Power generation prices are rising because of:

• Plants decommissioned due to environmental factors, decreasing supply offers to the grid
• Projections forecasting peak load increases
• Regulations requiring improved reliability risk modeling for extreme weather and accreditation that more accurately values each resource’s contribution to reliability

Click here to see the Environ Energy blog on the PJM capacity negotiation.