The Ledger Letter Finance Studio Advisors · November 4, 2026 |
The Power Auction Cleared at Its Ceiling and Still Came Up Short.PJM’s Stu Bresler put it plainly: this auction leaves no doubt that data centers’ demand for electricity continues to far outstrip new supply. The sale for the year starting June 2027 cleared at the cap in every zone and still finished 6,623 megawatts short. |
The Breakdown Today’s disagreement: the oil market is pricing a shortage it can ship its way out of; the power market is pricing one it cannot. |
| 01 | The loud fact PJM’s 2027/2028 capacity auction cleared at $333.44 a megawatt day, the approved cap, across the entire footprint. Cleared supply at that price comes to roughly $16.4 billion. |
| | 02 | The quiet fact It procured 134,479 megawatts of unforced capacity and still finished 6,623 megawatts under its own reliability requirement, a reserve margin of 14.8% against a target nearer 20%. |
| | 03 | The anchor The same auction cleared at $28.92 for the 2024/2025 year. Two auctions later it was $329.17, and now it is at the ceiling. The market monitor put data centres at 63% of the first jump. |
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The same demand clearing this auction at its ceiling also arrives as a software bill, and that one is climbing just as quickly. |
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| By the Numbers | PJM capacity, 2027/2028 | $333.44 a megawatt day, the cap | | PJM capacity, 2024/2025 | $28.92 a megawatt day | | Capacity procured | 134,479 megawatts of unforced capacity | | Shortfall against requirement | 6,623 megawatts, a 14.8% reserve margin | | Cleared cost of the auction | About $16.4 billion |
PJM Base Residual Auction results announced on December 17, 2025, for the delivery year beginning June 2027. Earlier clearing prices come from the same auctions. The cost is cleared supply times the clearing price and is not what every customer pays, because of self supply and bilateral contracts. Household bill figures as reported by IEEFA. |
A Market That Ran Out of Room to ClearAn Auction With No Room Left PJM runs the largest power market in the country. Once a year it buys a promise rather than electricity: generators commit to be available three years out, and one auction sets the price of that promise for everybody. For the year beginning June 2027 the price came out at $333.44 a megawatt day. That is the cap. There is no higher number the auction is permitted to print. The sale runs three years ahead precisely so that a shortage has time to attract a plant. This one did not. It bought 134,479 megawatts of unforced capacity at that price and still finished 6,623 megawatts under what PJM says it needs, a reserve margin of 14.8% against a target closer to 20%. Cleared supply at the clearing price is about $16.4 billion. How Fast This Happened Four auctions tell the story. The 2024/2025 year cleared at $28.92 a megawatt day. The 2025/2026 year cleared at $269.92. The 2026/2027 year cleared at $329.17. This one cleared at the ceiling. PJM’s market monitor attributed 63% of that first jump to data centres and put the cost to customers at about $9.3 billion in a single year. The forecast moved faster than anything could be built. In Dominion’s zone the expected data centre load growth by 2037 went from roughly 5,700 megawatts in a 2022 forecast to more than 20,000 megawatts in a 2025 one. |
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Who Pays and Who Collects A glossary note, because two different payments get called the power bill. The energy payment buys electricity actually produced. The capacity payment buys the promise that a plant will be there on the worst day of the year. This auction sets the second one. It lands on a household. IEEFA reports an average Pepco residential bill in the District of Columbia up about $21 a month from June 2025, roughly half of that from capacity prices, with about $18 a month in western Maryland and about $16 in Ohio. The $16.4 billion does not evaporate on the way. It is revenue for whoever owns the plants, which is where this reaches a portfolio: the independent power producers and regulated utilities collecting it sit in the utilities weight of a broad index fund. A regulated utility passes the cost through and earns a return on what it builds. An unregulated generator keeps the difference. Both are in there. |
Every one of those megawatts eventually becomes a server, a factory or a vehicle. One of those vehicles has no steering wheel. |
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What Settles It Our read is that the ceiling has become the floor, and that the next auction is the only thing that tells you whether supply is answering the price. The check is published. Another clear at the cap with the reserve margin still under 17% would say the shortage is structural and the price is doing nothing to fix it. We would be wrong if the next auction clears under $250 a megawatt day with the margin back above 19%, which would mean the new supply arrived in time to matter. |
Oil answers a price by finding more barrels. This market has to find more wire. |
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