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(Bloomberg) — Households and businesses spanning New Jersey to Chicago are poised to pay record sums for electricity as an AI-fueled demand surge drives up power costs on the largest US grid.
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PJM Interconnection LLC, which operates the 13-state grid that serves nearly one-fifth of Americans, said its latest auction to secure electricity supplies will cost consumers $16.4 billion.
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The so-called capacity auction determines how much generators will get paid for being available in the year starting June 2027. The results released Wednesday show the daily cost of those supplies rose to $333.44 per megawatt from $329.17. Households and businesses pay for these on their monthly utility bills.
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It’s the third consecutive record-breaking auction held by PJM, which has become a bellwether for energy inflation. Home to the largest concentration of data centers, the grid has seen power consumption strain supplies, driving up prices. Demand from data farms directly added 45% of costs in the last auction, according to Monitoring Analytics LLC, the federally-appointed watchdog for PJM.
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The biggest beneficiaries of the auction will be independent power generators that have seen their stocks soar due to the AI boom. Those include Constellation Energy Corp., Talen Energy Corp., NRG Energy Inc. and Vistra Corp.
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Vistra rose 2.2% in late trading, while Talen jumped 3.3%.
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In spite of the skyrocketing costs, the auction for a second year didn’t manage to secure enough supply to meet projected demand. While the grid needs a 20% reserve margin to ensure reliability, the auction only cleared 14.8%.
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“We are short,” Stu Bresler, PJM’s executive vice president of market services and strategy, said on a call with reporters Wednesday. The vast majority of new demand this auction came from data centers, he added.
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