PJM recently released its Base Residual Auction, which indicates the capacity rates for various delivery zones in PJM. The recently released rates are significantly higher across PJM for the 2025/2026 delivery years than those for 2024/2025. These higher rates will start on June 1, 2025.
In addition, demand response payments have increased. As generators receive higher payments for their capacity to meet peak demand, demand response (DR) resources can also cash in by committing to reduce their consumption during these high-demand times. It’s a win-win, as both sides play their part in balancing the energy scales!
What Can Businesses Do To Save Money?
The higher demand response payments can help businesses offset the impact of the increased capacity charges.
Peak load management is another way businesses can manage their future capacity costs. It can help identify opportunities and alert business managers when they should try to reduce their usage. For example, a customer who lowered their usage this summer by using 100kWh less than their usual usage (capacity) could save an estimated $10,000 in capacity costs for the 2025/2026 delivery year.
Let Nania Help You!
Our advisors are experts in what they do. Our team works closely with our trusted electric suppliers to determine the best plan to save you money. While we cannot control the market, we can help you evaluate your business’s best plan of action, identify opportunities, and reduce risk. Demand response and peak load management are some options for assisting businesses in balancing out increased costs, but there are still other opportunities for businesses to look at.
Contact us at info@naniaenergy.com or find any of our advisors on LinkedIn. We are ready to discuss your options!
Terms That May Be Unfamiliar
PJM
PJM Interconnection is a regional transmission organization (RTO) that coordinates the movement of wholesale electricity in all or parts of Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia and the District of Columbia.
Capacity
Capacity is essentially the insurance of having adequate electric supply available during peak demand hours on the electric system. It is the maximum amount of power a generator can produce when running at full capacity. It’s usually measured in megawatts (MW) or kilowatts (kWh). Capacity helps utilities predict how much electricity a generator can handle. Capacity can also refer to the maximum amount of electricity a power plant can supply at a specific time under certain conditions. For example, a home’s electrical capacity is the amount of electricity it can support, while the electrical load is the amount that’s actually being used.
Demand Response (DR)
Demand response refers to balancing the demand on power grids by encouraging customers to shift electricity demand to times when electricity is more plentiful or other demand is lower, typically through prices or monetary incentives. Essentially, asking customers to use less energy during times when demand is high, and receiving a reward for using less.
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