Maryland residents should brace for higher electricity rates after PJM’s latest capacity auction reached the federal price cap, underscoring growing reliability concerns and a supply-demand mismatch across the grid.
Electricity bills are likely to increase again across Maryland in 2026, following a recent capacity auction by PJM Interconnection, which coordinates electricity for 65 million people across 13 states, including Maryland.
The capacity auction is PJM’s tool for securing a sufficient electricity supply to meet future demand. Power generators bid to supply capacity three years ahead, and PJM purchases what it needs to ensure system reliability.
Capacity prices — charged in addition to energy and transmission costs — reflect the balance between available generation and expected peak demand. When supply tightens, prices spike.
As reported in a Maryland Matters article, the auction cleared at its maximum price of $329.17 per megawatt-day, a cap instituted after pressure from Pennsylvania and Maryland leaders, preventing an even higher rate.
According to Maryland Matters:
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.
In Maryland, BGE customers will still see an increase despite a more balanced auction across the region, as previous credits had temporarily lowered their costs.
Maryland’s Reliability Crunch
Transitioning to cleaner energy remains a top priority for Governor Moore and the General Assembly. However, with generation retirements accelerating faster than new resources are coming online, Maryland has been compelled to keep older baseload plants, such as Wagner and Brandon Shores, running through 2029 to maintain grid stability.
The reliability challenge is not theoretical — it’s here. Talen Energy had planned to retire both plants in 2025, but PJM flagged immediate voltage stability risks if they shut down as scheduled. In response, PJM, Maryland regulators, utilities, and other stakeholders reached an agreement to keep the facilities in operation until May 2029.
As previously reported on Conduit Street, the controversial Piedmont Reliability Project is one of several transmission upgrades aimed at reducing long-term dependence on aging fossil fuel infrastructure. While aimed at bolstering the grid, the project has sparked local and environmental concerns.
Cost Pressures Keep Mounting
While capacity charges are only part of a utility bill, they’ve grown significantly in recent years. When rates jump this sharply, utilities pass those costs to ratepayers. Other factors pushing prices higher include:
- Grid Investments: Transmission upgrades and deferred plant retirements increase costs.
- Retirements: Older, less efficient plants are closing faster than replacements can come online.
- Delayed Clean Energy Projects: Supply chain issues and interconnection bottlenecks slow new development.
Gas-fired plants remain the backbone of PJM’s capacity mix, making up 45% of resources cleared in the latest auction, followed by coal (22%) and nuclear (21%). Wind, solar, and hydro combined made up just 8%.
