PJM 2027/2028 Capacity Auction Clears at Price Cap
In December 2025, PJM Interconnection's capacity market experienced an unprecedented clearing event for the 2027/2028 planning year, with prices hitting the maximum Federal Energy Regulatory Commission (FERC) approved price cap across the entire Regional Transmission Organization (RTO) footprint. This represents the second consecutive auction to clear at its maximum cap (the 2026/2027 auction also cleared at its cap of $329.17/MW-day), driven by a widening reliability gap, rapid data-center expansion, and power plant retirements.
The capacity deficit cleared at $333.34/MW‑day (or $333.44/MW-day depending on final adjustments), securing 134,479 MW of Unforced Capacity (UCAP). Crucially, this procurement fell 6,623 MW short of PJM's target reliability requirement, signaling a physical supply deficit on paper.
PJM released a simulated scenario demonstrating that without the FERC-negotiated price caps, capacity prices would have exploded:
"PJM also released a simulation illustrating what clearing prices would have been without the cap. Under those conditions, RTO prices would have reached $529.80/MW‑day, with the Dominion Zone clearing at $542.83/MW‑day."
The total cost of the auction to be collected from ratepayers across the 13-state footprint reached $16.4 billion, representing a minor increase from the $16.1 billion recorded in the 2026/2027 auction, but a staggering nearly 8-fold increase from the $2.2 billion in capacity costs recorded just three years prior (2024/2025 delivery year). These capacity costs are passed directly to retail consumers through utility bills, particularly for customers exposed to wholesale market pricing.
To address these soaring costs, PJM proposed a Reliability Backstop Auction (RBA) in April 2026, which would establish a bilateral contracting phase (September 2026 to March 2027) followed by a centralized pay-as-bid auction in 2027 to procure up to 15 GW of new capacity with 2-to-15-year revenue certainty to incentivize generation investment.