FERC and PJM Issues

PJM's July 2025 Capacity Market results impacts on Maryland customers: Many Maryland households are likely to see costs slightly increase for the 2026/2027 delivery year—on top of the 2025/2026 delivery year's much more substantial increases from the 2024/2025 delivery year—but customers of Baltimore Gas and Electric could see slight bill decreases after accounting for certain credits, following the regional power system operator’s (PJM) capacity market auction released this week. To learn more about causes and OPC's advocacy to improve auction rules, click our press release.

The chart below shows initial estimates of the impacts of the July 2025 capacity market auction for the energy delivery year June 1, 2026, to May 31, 2027, relative to last summer’s auction (delivery year June 1, 2025, to May 31, 2026) and the previous auction (delivery year June 1, 2024, to May 31, 2025). The impacts will be reflected on customer bills next year. The results are rough estimates and depend on the level of customer energy consumption. The exact timing of the increases will depend on regulatory decisions about when the wholesale costs are approved to be included in retail rates.

The table above shows the capacity market auction clearing price increases. Some Maryland customers, however, will receive a credit that reduces their bill as a result of rule changes related to payments for RMR units. Specifically, BGE and Pepco customers will see their capacity market cost increases wholly or partially offset. We estimate BGE customers will see an average credit-related reduction of approximately $4.20/month and Pepco customers $0.85/month for 2026/2027 delivery year. This means that, overall, for costs related to the capacity market increases and RMR credits, BGE customers will see an estimated bill decrease of $3.36/month, and Pepco customers an increase of $2.50/month. The rule changes were urged by OPC and others and adopted by PJM.

The bill-increase impacts from the most recent capacity market auction are lower in BGE's service territory than those in other utility service territories because BGE's customers already were paying higher capacity market prices. Last year, the BGE zone’s price was $466/MW-day compared to the regionwide clearing price of $270/MW-day. Although the clearing price for this month’s auction for the BGE zone ($329/MW-day) is less than last year’s clearing price for the BGE zone, the BGE zone receives credits related to imports of lower cost power, bringing the capacity cost from the last auction to the BGE zone down to $307/MW-day, less than the current auction’s clearing price.

OPC's August 2024 report shows how many Maryland customers face average annual electricity bill increases of hundreds of dollars in the coming years because of problems in the regional market run by PJM Interconnection, LLC, the entity that administers the wholesale power market and is responsible for transmission planning. The initial round of rate hikes is driven in part by PJM’s recent auction that saw prices beginning next June for electric generation capacity—a historically small but soon-to-be-large part of customer bills—spike by more than 800 percent.

For a full copy of the report, click here.

For OPC's press release on the report, click here.

For media coverage on OPC's report on rising utility rates, click here.

Aside from increased rates from the auction results, Maryland customers face additional rate increases to pay the owner of old fossil fuel plants, Talen Energy, to delay the retirement of the plants, as well as future costs to pay Exelon—the Illinois-based owner of Baltimore Gas & Electric and other Maryland utilities—for $725 million in capital expenditures for transmission upgrades that serve as PJM’s solution for resolving reliability issues associated with the eventual power plant retirements.

Talen is seeking to recover from Maryland customers more than $629 million under what PJM calls a “reliability must run” or “RMR” arrangement to continue operating its Brandon Shores and Wagner power plants near Baltimore beyond their proposed retirement of June 1, 2025. Those costs will be incurred while Exelon completes the transmission projects—which have an estimated completion date of December 2028. The RMR costs could be higher if the transmission projects take longer to complete. PJM could also determine the plants continue to be necessary for other reasons, extending the RMR costs paid by ratepayers.

The report, prepared by Synapse Energy Economics, further reveals how PJM has constructed its market in ways that leave PJM customers highly vulnerable to price swings and the decisions of generation companies. The analysis highlights a scenario under which the removal of the Brandon Shores and Wagner power plants, totaling about 2,000 MW, from the resources bidding into and clearing the auction—the equivalent of less than 1.5 percent of the 135,000 MW that cleared the auction—had a region-wide impact that will benefit generators (and cost customers) over $5 billion. It further explains that Talen stands to gain $360 million compared to the scenario in which its Baltimore-area plants participate in the auction.