Last month, we wrote about how the early-July heat wave pushed our regional power grid near its limit. Two follow-ups have come out since, and together they paint a clear picture of where electric bills are headed.
Here’s what happened, who’s affected, and what it means for your home.
Two Big Updates From July
1. The heat wave likely set a new demand record after all. On July 10, PJM, the grid operator for 13 states including Ohio, estimated that demand on July 2 would have reached about 168,000 megawatts without the emergency steps it took to reduce usage. That’s above the previous record set in 2006. PJM said the figure still needs to be verified, and its dispatch team noted the grid used every available generator that day.
2. The capacity auction hit its price cap, and still came up short. On July 14, PJM released the results of its auction for the June 2028 to May 2029 delivery year:
- The price cleared at $325 per megawatt-day, the maximum allowed. It was the third auction in a row to hit the cap.
- PJM secured enough capacity to cover forecast peak demand plus a reserve margin, but it still fell 6,831 megawatts short of its reliability requirement. This auction and the one before it were the first in PJM’s history where the entire region fell short.
- Only 525 megawatts of new power plants and upgrades cleared the auction.
- Without the cap, prices would have been far higher. Analysts reported PJM’s own simulation put the uncapped price around $555 per megawatt-day.
PJM’s CEO put it simply: demand for electricity is growing faster than supply. PJM points to new data centers as a major driver, and it plans an emergency “backstop” procurement this fall to address the shortfall.
What’s a Capacity Auction, and Why Should I Care?
Each year, PJM pays power plants in advance to make sure enough electricity will be available on the hottest and coldest days, usually about three years out. That cost is called capacity, and it gets built into the supply portion of your electric bill.
Capacity is only one piece of your bill. Energy, transmission and delivery charges make up much of the rest. But when capacity prices jump, the supply price on your bill tends to follow. That’s a big part of why Ohio’s supply prices rose on June 1.
Here’s how the recent auctions line up with your bills:
| Delivery year | Capacity price | Shows up in bills starting |
|---|---|---|
| June 2026 – May 2027 | $329.17/MW-day (cap) | June 2026 |
| June 2027 – May 2028 | $333.44/MW-day (cap) | June 2027 |
| June 2028 – May 2029 | $325.00/MW-day (cap) | June 2028 |
The short version: capacity costs are locked in near record levels through at least May 2029. The next auction, for 2029–2030, is scheduled for December.
Who’s Affected in Our Area?
This is where it gets local, because not everyone in our service area is in PJM:
- Ohio: Yes. AEP Ohio, Duke Energy Ohio and AES Ohio customers are all in PJM.
- Northern Kentucky: Yes. Duke Energy Kentucky, which serves Florence, Erlanger, Independence, Newport, Fort Thomas and nearby communities, is part of PJM.
- Louisville and Lexington: Not directly. LG&E and KU aren’t part of PJM. Their rates are set through Kentucky Public Service Commission rate cases, like the one we covered in February.
- Indianapolis area: Not directly. AES Indiana and Duke Energy Indiana are part of a different regional grid (MISO), which runs its own capacity market. Rates there have their own pressures, like the AES Indiana increase approved in June.
What You Can Do
Shop your supply rate (Ohio). If you’re in Ohio, you can compare your utility’s Price to Compare with fixed-rate offers on the state’s Apples to Apples site, energychoice.ohio.gov. A fixed rate can provide short-term stability. Read the terms carefully.
Cut peak-time usage. Capacity costs are driven by the highest-demand hours, typically hot summer late afternoons and very cold winter mornings. Pre-cooling, smart thermostats and utility demand response programs all help, and some pay bill credits.
Produce some of your own electricity. Every kilowatt-hour your solar panels produce and your home uses is one you don’t buy, along with whatever capacity, energy and delivery costs are baked into it. Solar is a 25-plus-year hedge against a market that, by PJM’s own account, is short on supply.
Consider a battery for the evening peak. Grid demand now peaks in the late afternoon and evening, when solar production is fading. A home battery can store midday solar for those hours and keep essentials running if the grid is ever stretched too far.
The Bottom Line
You can’t control the outcome of a grid auction. You can control how much of your electricity depends on it.
Icon Solar has helped homeowners across Ohio, Kentucky and Indiana go solar since 2009. We’ll use your actual bills to show you realistic numbers, without hype. Learn more about solar in Cincinnati, Columbus, Dayton and Northern Kentucky, explore the Franklin WH home battery, or request your free quote. You can also call us at (866) 396-4266.
Frequently Asked Questions
What was the result of PJM’s July 2026 capacity auction?
PJM’s auction for June 2028 through May 2029 cleared at $325 per megawatt-day, the maximum allowed. It still fell 6,831 megawatts short of PJM’s reliability requirement, and only 525 megawatts of new generation and upgrades cleared.
How does the PJM capacity auction affect my electric bill?
Capacity costs are built into the supply portion of electric bills in PJM states. With the last three auctions all at the price cap, capacity costs are expected to stay near record levels through at least May 2029.
Is my utility part of PJM?
In our area, AEP Ohio, Duke Energy Ohio, AES Ohio and Duke Energy Kentucky are part of PJM. LG&E and KU in Louisville and Lexington are not, and AES Indiana and Duke Energy Indiana are part of the MISO grid instead.
Did PJM set a new demand record in July 2026?
PJM estimated that demand on July 2, 2026 would have reached about 168,000 megawatts without emergency demand reductions, above its 2006 record. PJM said the estimate still needed verification.
Can solar panels reduce the impact of rising capacity costs?
Yes. Electricity your solar panels produce and your home uses is electricity you don’t buy, including the capacity costs built into supply prices. A home battery can also reduce how much power you draw during evening peak hours.
