PJM Capacity Auction Misses Reliability Target for Third Year as Uncapped Price Would Have Been 70% Higher

PJM Capacity Auction Misses Reliability Target for Third Year as Uncapped Price Would Have Been 70% Higher PJM's 2028/2029 auction hit the $325/MW-day regulatory ceiling and came up 6,831 MW short, with the grid's own modelling putting the unconstrained clearing price at $554.72. PJM Interconnection on Tuesday (2026-07-15) announced that its 2028/2029 Base Residual Auction fell 6,831 megawatts short of the grid's one-in-ten-year reliability standard, the third consecutive year the largest transmission organization in the US has failed to procure enough committed capacity for future delivery. The auction cleared at the FERC-approved ceiling of $325 per megawatt-day.¹ The ceiling is not a market-clearing price in any conventional sense. PJM's own simulation of the auction without the cap produced a result of $554.72 per megawatt-day, 70% above the regulated limit. That gap between what participants would pay in an unconstrained auction and what the regulator permits has become a central fault line in debates over how the US power market is governed.¹ The shortfall has not narrowed. The previous auction, covering the 2027/2028 delivery year, ran approximately 6,500 MW light. The 2028/2029 figure of 6,831 MW represents a marginal deterioration, pointing to capacity additions that are failing to keep pace with demand growth across the grid's territory. PJM serves 67 million customers in 13 states and Washington, DC.¹ Data center construction is the principal driver of that demand growth. OilPrice.com reported on Tuesday (2026-07-15) that PJM had "failed for a third straight year to secure enough future supply commitments to ensure reliability for the future amid a historic boom in data center demand." The grid's load forecasts have been revised upward repeatedly in recent planning cycles as hyperscale facilities concentrate in Virginia and neighbouring mid-Atlantic states.¹ On the supply side, Constellation Energy was the auction's largest individual participant. The company disclosed in a Securities and Exchange Commission filing that it cleared 18,875 MW in the auction, up from 17,950 MW in the prior cycle. The incremental 925 MW Constellation brought to market did not close the system-wide gap.² The regulated cap has itself declined between cycles. At $325 per megawatt-day for 2028/2029, it is 2.5% below the $333.44 ceiling that applied in the prior auction year, as Utility Dive reported on Tuesday (2026-07-15). The direction of the administered price is moving away from the uncapped market level even as the supply gap persists.¹ The reform question now sits at the centre of the capacity market debate. Jefferies equity analysts, cited by Utility Dive on Tuesday (2026-07-15), said they "continue to expect long-term structural reforms in the base residual auction toward a continuing operating cost model with materially lower prices." Reforming the PJM capacity auction, the analysts argued, is "among the single most impactful potential drivers of affordability."² The opposing argument runs differently. Critics of the current cap contend that holding prices below clearing levels discourages new supply investment and deepens the reliability problem over successive cycles. Utility Dive cited one market participant warning of "an intervention doom loop," where administered prices suppress build-out, the shortfall widens, and further intervention follows.² PJM is expected to release results of a simulated auction run without the price cap, a dataset that will show how far below the market the current ceiling sits across different capacity classes and regions. Utility Dive reported that this modelling is forthcoming.² FERC's response to that data and any decision on structural reform will determine whether the 2029/2030 cycle marks a fourth consecutive shortfall or whether the capacity market is permitted to send a price signal strong enough to attract new supply. The Jefferies view, that reform should target lower prices through a cost-of-continuing-operations model, points in one direction. The market gap of $229.72 per megawatt-day between the cap and the unconstrained clearing price points in another.²