PJM’s rate increase is here. What’s your strategy?
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- PJM 2026/2027 capacity rates are set at $329.17 per MW-day, up from $28.92 per MW-day in the 2024/2025 auction — a more than 1,000% increase over two years
- PJM's 2027/2028 delivery year rates climbed further to $333.44 per MW-day, with 2025/2026 rates having taken effect on June 1, 2025
- Kevin Mantel, Senior Account Manager at Caterpillar Electric Power, said many utilities remain in a 'sit and wait' mode, watching early adopters before acting
- Utilities face three choices per Mantel: absorb the loss, pass increased costs to members, or adopt a holistic energy strategy covering generation, DERs, incentive programs, and demand response
- An ISO-NE utility deployed a 4.9 MW/15 MWh battery energy storage system to dispatch stored energy during high-cost peak periods, reducing peak energy costs and creating a new revenue stream
- One Northeast/Mid-Atlantic utility paired battery storage with existing natural gas generation and peak demand management, saving millions of dollars over the past decade
- Caterpillar Energy Services offers its Active Management Platform (AMP), a DERMS with real-time monitoring via a 24/7 Network Operating Center, as an integrated alternative to traditional transactional vendor relationships
Why it matters: For municipal utilities and electric cooperatives in the PJM footprint, the 1,000%+ capacity rate jump converts backup generators from sunk-cost insurance into potential revenue assets. Utilities that move first can monetize distributed energy resources through demand response and peak shaving; those that wait absorb losses or pass costs to members — making the June 1, 2025 rate effective date a hard deadline for strategic action.
