Is PJM's capacity auction why Maryland power bills rose?
Households at Maryland's four big utilities paid 14% more for a kilowatt-hour in the year from June 2025, when the price PJM sets for standby power jumped. The state's regulator pointed to the auction's costs. We split each utility's rise to measure them.
How much of the rise in Maryland power prices is the capacity charge?
Maryland’s four investor-owned utilities, BGE, Pepco, Delmarva Power and Potomac Edison, sell power to about 2.2 million households on the standard offer, the default service the state regulates. In the year from June 2025 those households paid 21.1 cents a kilowatt-hour on average, 14% more than the year before (EIA, 2026). Prices in general rose 3% (BLS, 2026).
Part of that price pays for capacity. PJM runs the grid for Maryland, 12 other states and Washington, DC (PJM, 2025b). Ahead of each year it holds an auction for a promise that enough power plants will be ready for the hottest hours, and every customer pays the price it sets. For the year from June 2025 that price rose fivefold to ninefold in the zones of BGE, Pepco and Potomac Edison, and by half in Delmarva’s, where it was already high (PJM, 2026b). In August 2024 Maryland’s Office of People’s Counsel, which speaks for households before the regulator, estimated that the auction would add $4 to $18 a month to their bills (Maryland OPC, 2025).
The claim holds at Pepco and Potomac Edison, fails at Delmarva, and holds at BGE only at households’ share of peak demand. Spread evenly over every kilowatt-hour its zone uses, the average for all customers, the higher capacity charge accounts for 70% of the rise at Pepco and 83% at Potomac Edison (Fig. 1). Households use more of their power at the peak than businesses do, so their own share of the charge is larger, and on that count both figures rise further. At BGE the charge accounts for 49% at the average for all customers and 60% at households’ share. At Delmarva, where the capacity price had tripled a year earlier, it accounts for a fifth to just over a quarter of the rise. The result at Pepco and Potomac Edison holds under every alternative count we tried; BGE’s turns on how energy is counted.
The capacity charge accounts for most of the rise at Pepco and Potomac Edison, about half at BGE and a quarter at Delmarva.
Share of each utility's rise in the household price, June 2025 to May 2026 against the year before, that the rise in the capacity charge accounts for: ring, at the average for all customers; dot, at households' share of peak demand; dashed line, half the rise.
How we tested it
We measure the price households pay: what they spent on electricity divided by the kilowatt-hours they used, from EIA’s monthly utility survey, which covers all four utilities (EIA, 2026). Only households on the standard offer count, because for a household that buys from a retail supplier the utility reports the delivery part of the bill alone. “The year from June 2025” runs from June 2025 to May 2026, the year over which PJM sets each capacity price, and the rise compares it with the twelve months before.
Each dollar figure is a change in price times the average household’s monthly use at that utility in the year from June 2025. Prices in general are the consumer price index for all items, averaged over the same June-to-May years; BLS did not publish October 2025.
The capacity charge for each utility’s PJM zone starts from the final price that customers in the zone pay, in dollars per megawatt a day. It multiplies that by the zone’s capacity obligation, the share of PJM’s peak its customers must cover, and by 365 days. We divide that by the energy PJM forecast the zone would use over the same year, measured at the zone’s meters (PJM, 2026a; PJM, 2026b). That gives the average for all customers. A second case scales the average to households. It multiplies by their share of each utility’s Maryland peak demand over their share of its sales, both as the regulator reports them (Maryland PSC, 2025b; Maryland PSC, 2026). In the two years tested that scale runs from 1.15 to 1.26.
We fixed the test before pulling any utility’s data. The claim holds if the higher capacity charge accounts for at least half the rise at all four utilities in both cases. It fails if the charge accounts for less than half at all four in both, and holds only in part otherwise. A utility whose price rose by less than half a cent would have had no rise to explain; all four rose by more than a cent. The same arithmetic for June and July 2026, the months EIA has published from the next capacity year, is a second, partial read.
The test has four limits of scope. EIA’s figures for 2025 and 2026 are preliminary until its annual survey replaces them. A zone’s average charge stands in for the utility’s, and the Pepco, Delmarva and Potomac Edison zones reach beyond Maryland. The third is when bills carried the cost. The regulator moved BGE’s recovery of the new capacity cost into the autumn and spring, inside the year we measure (Maryland PSC, 2025a). The Office of People’s Counsel expected Pepco and Delmarva customers to see it from August 2025 and Potomac Edison’s from October (Maryland OPC, 2025). Their monthly prices show no step of that size at those dates, so the months cannot be read from the data. Even if those customers paid the cost only from August or October, it would still be more than half of the rise at Pepco and Potomac Edison. Last, the standard offer took in households that had left it. Those buying from retail suppliers fell from about 289,000 in June 2024 to about 3,000 by June 2026, so the two years count a slightly different set of homes (Maryland PSC, 2026).
At Pepco and Potomac Edison, the capacity charge is most of the rise
Pepco’s household price rose from 20.6 to 22.6 cents a kilowatt-hour. The capacity price its zone pays rose more than fivefold, to $270 a megawatt a day (PJM, 2026b). That lifted the charge by 1.4 cents a kilowatt-hour at the all-customer average, and by 1.8 cents at households’ share. A Pepco household on the standard offer used 832 kilowatt-hours a month on average. Its bill rose by $17 a month, and $15 of that was the capacity charge (Fig. 2).
Potomac Edison, which serves western Maryland and has the cheapest power of the four, saw its price rise from 14.5 to 16.1 cents. Its zone’s capacity price rose ninefold, to $270, the same jump as the PJM-wide price (PJM, 2023; PJM, 2025b). At households’ share of peak demand the higher charge comes to $18.56 a month on an average bill, against a total rise of $18.67.
Those figures sit close to the Office of People’s Counsel’s estimates of $14 a month for Pepco and $18 for Potomac Edison (Maryland OPC, 2025). The wholesale firms that supply the standard offer bid with a placeholder capacity price, and the utility pays them the difference once PJM’s final price is known (Potomac Edison, 2023). Because that difference flows on into the household rate, as BGE’s filings show, households on the standard offer pay PJM’s final capacity price whatever their supplier assumed (BGE, 2025).
At Pepco and Potomac Edison the higher capacity charge is most or all of the rise in the monthly bill.
Rise in the average household's monthly bill at each utility, June 2025 to May 2026 against the year before: dot, the part that is the higher capacity charge at households' share of peak demand; ring, the whole rise.
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