GTI Energy Advisors recently worked with a client in PJM on an electricity contract and it reminded me how much that market has changed in a short time. Five years ago, PJM was one of the more predictable places in the country to buy power. Supply was plentiful, capacity was cheap and most buyers could renew without much stress. That's no longer the case.
According to PJM's Independent Market Monitor, the total wholesale cost of power in PJM was about $45 per MWh in 2020 and nearly $83 in 2025, an increase of more than 80%. What is worse is that almost 50% of the increase occurred in the last year. Retail rates are up around 50% in Pennsylvania, Ohio and New Jersey, and more than 75% in Maryland since 2020. For anyone buying power from New Jersey to Illinois, this is no longer a market you can put on autopilot.
So what actually changed?
It was caused by several factors hitting around the same time, and they all move the market upward.
Data centers are one of the largest of these factors. Northern Virginia already has the largest data center market in the world, and developers are now building across Ohio, Pennsylvania and the rest of the footprint. PJM's load forecasts call for roughly 30 GW of new peak demand by the end of the decade, and most of it comes from data centers. That's a big shift for a grid where demand was essentially flat for more than ten years. The market monitor has said directly that data center load growth is the main reason for today's capacity prices, and it estimates that data center demand added more than $23 billion to the cost of the last three capacity auctions.
At the same time, supply is moving the wrong way. Coal and older gas plants are retiring because of age, economics and environmental rules, and new generation isn't coming online fast enough to replace them. PJM's interconnection queue has been backed up for years, so a new project can wait a long time just to get approval to connect. The result is a grid that is losing dispatchable generation while demand keeps climbing.
You can see this most clearly in the capacity market. Capacity is what PJM pays generators to be available when the grid needs them, and that cost is passed on to every customer's bill. For the 2024/2025 delivery year capacity cleared at about $29 per MW-day. The next auction jumped to around $270, and the three auctions after that all hit the price cap of roughly $325 to $333. The most recent one, for 2028/2029, still came up nearly 7,000 MW short of PJM's reliability target. When a market clears at the cap and still can't buy enough supply, that tells you how tight things have become.
Natural gas plays a role as well. Gas sets the price of power in most hours in PJM, so when gas prices rose in 2025, energy prices followed. The market monitor found that fuel costs drove most of last year's jump in wholesale energy prices. Congestion on the transmission system also roughly doubled, which raises costs in the zones where power has the hardest time getting through.
How do data centers affect what a C&I customer pays?
This is the question we get most often, because most commercial and industrial buyers don't have a data center anywhere near them. The answer is that you don't need one next door to pay for it. The impact shows up in three places.
The first and largest is capacity. When PJM adds data center load to its forecast, it has to buy more capacity to cover that higher peak. In a market that is already short on supply, that pushes the clearing price up for everyone. Your share of that cost is based on your peak load contribution, which is your usage during the grid's highest demand hours.
What that looks like on a bill: A facility with a 2 MW peak load contribution paid roughly $21,000 a year for capacity at the $29 price. At today's capped prices the same facility pays around $240,000. Nothing about how that facility runs has changed. The market around it did.
The second is energy. Data centers run around the clock at a steady load, which adds demand in every hour, not just on hot summer afternoons. That means more expensive power plants have to run more often to keep up, and the price of power rises across the board. Suppliers see this in the forward curves and price it into the fixed-rate offers you receive.
The third is transmission. Utilities are spending billions on new lines and substations to serve large new loads, and much of that cost is spread across all customers in the zone. Those charges flow through your transmission line item, which is set by your usage during peak hours.
In practical terms, C&I customers are paying part of the cost of the data center buildout whether they realize it or not. The buyers who handle it best understand which of these costs they can control and plan around them.
Why doesn't it show up the same way on every bill?
Much of the increase arrives through line items buyers don't always watch. A renewal can look fine on the energy rate and still cost far more once capacity, transmission and congestion pass through. We see this often, where the headline price gets all the attention while the pass-through charges do the real damage. Because capacity and transmission are tied to usage during a small number of peak hours, two facilities with the same annual usage can end up paying very different amounts.
This is where implementing demand management techologies (ie generators, storage)
Nobody can promise you savings anymore
When I started in this industry, I heard the same pitch from colleagues over and over: "Work with me and I'll save you money." It always bothered me, because a broker or advisor doesn't set the price of power. The market does. If prices happened to be falling when your contract came up, the savings were real, but they came from the market and not from the person who sold you the contract.
What a good advisor can do is make sure you get the best price available when you buy, with terms that protect you. When the market moves in your favor, that's great. When it moves against you, you want someone who saw it coming and positioned you for it. In PJM today the market has moved hard against buyers, and the old "I'll save you money" line doesn't hold up. Anyone still leading with it is either not watching the market or not being straight with you.
The better question to ask an advisor is how they'll get you the best possible outcome in a rising market. That means understanding where the costs come from, knowing which parts of the bill you can control, and timing your purchases so you aren't buying at the worst moment.
What should you do about it?
Here's what we're telling our clients in PJM right now.
- Know exactly what's in your current contract. Find out which components are fixed and which pass through, especially capacity and transmission.
- Start your renewal early. Twelve to eighteen months out gives you time to watch the market and buy when there's an opening.
- Manage your peak load contribution. Cutting usage during the few hours that set your capacity and transmission obligations can lower your costs for a full year.
- Layer your purchases instead of trying to time the market with one big buy.
- Take a serious look at backup generation. With a tighter grid, on-site power has gone from a nice-to-have to a practical need, both for reliability and for controlling peak exposure.
Where GTI Energy Advisors fits in
That's how we approach every client. The PJM deal we just closed didn't come from promising a lower number. It came from understanding the capacity picture and building the contract around it. If your contract renews in the next year or two, reach out to us.
The market sets the price. The strategy is up to you.