For most Americans, the inner workings of the nation’s electricity grid are a mystery—until a spike shows up on their monthly bills. Over the past two years, a series of record-breaking electricity auctions and a brewing political fight over the future of coal and renewables have pulled the curtain back on the country’s largest grid region: PJM Interconnection. Stretching from New Jersey to Chicago, this nonprofit operator is suddenly at the center of a high-stakes debate about the cost and reliability of the country’s power supply, with consequences rippling through household budgets and state capitals alike.
According to Inside Climate News, PJM Interconnection, based in Valley Forge, Pennsylvania, is the little-known giant responsible for keeping lights on for tens of millions of people. The organization traces its roots to a 1920s partnership between Pennsylvania and New Jersey utilities, built on the notion that pooling resources would mean cheaper, more reliable power. "When a customer in New Jersey can buy power from a power plant in New Jersey, or a power plant in Pennsylvania or a power plant in Ohio, it's going to be cheaper than if they were just buying from power plants from New Jersey," explained Abe Silverman, an energy research scholar at Johns Hopkins University.
But cheaper is not how most consumers would describe their current bills. In July 2025, PJM’s latest capacity auction—the process that determines how much power plant owners are paid to guarantee supply during high-demand periods—set a new record: $329.17 per megawatt-day, effective June 2026. The previous year’s auction had already shocked observers, leaping from $28.92 per megawatt-day two years earlier to $269.92 per megawatt-day. In raw dollars, that means aggregate payments to power plant owners have soared from $2.2 billion to a staggering $16.1 billion in just two years.
What’s behind these dizzying increases? The main culprit is surging electricity demand, much of it driven by data centers. Daniel Lockwood, a PJM spokesman, told Inside Climate News, "Unprecedented and continuing growth in demand from the proliferation of high-demand data centers in the region" is the leading factor. Silverman agreed, noting that the region’s long-term forecast now shows a sharp upward curve after years of flat demand.
At the same time, the grid is struggling to keep up with the pace of change. As old coal-fired plants retire—good news for the environment but a challenge for supply—new projects face a daunting queue to connect to the grid. As of June 2025, there were 63 gigawatts of projects waiting in PJM’s interconnection process, with 46 gigawatts having agreements to connect but held back by hurdles like permitting, siting, and financing. Many of these delayed projects are solar arrays, reflecting a broader clean energy boom across the region. Yet, as Sarah Moskowitz, executive director of the Citizens Utility Board of Illinois, put it, "The power grid operator’s policy decisions too often favor outdated, expensive power plants and needlessly block low-cost clean energy resources and battery projects from connecting to the grid and bringing down prices. This extended price spike was preventable."
The result for consumers has been swift and painful. PSEG, New Jersey’s largest utility, warned customers in February 2025 of a 17% rate increase, mostly due to rising PJM charges. By June, a typical household using 650 kilowatt-hours per month was paying $183—a $27 jump. ComEd customers in the Chicago area saw bills rise by roughly 10%, or $11 more per month for a typical usage of 609 kilowatt-hours. However, not everyone is equally affected: Dominion Energy customers in Virginia and North Carolina are largely insulated from the PJM price hikes because the company owns most of its generating plants, limiting the monthly PJM capacity cost to less than $2 per household.
The sharp rise in prices and the challenges of adding new power sources have not gone unnoticed by politicians. Governors across the PJM region have voiced frustration. Maryland Governor Wes Moore, a Democrat, did not mince words, calling the recent price hikes "a slap in the face."
Meanwhile, the national debate over the grid’s future is heating up. On August 8, 2025, Michigan Attorney General Dana Nessel and eight other state attorneys general filed for a hearing to challenge a July 7 report from the U.S. Department of Energy (DOE). The report, titled "Resource Adequacy Report: Evaluating the Reliability and Security of the United States Electric Grid," warns that the U.S. grid could become unreliable due to what it calls an "overreliance on intermittent energy sources like wind and solar" and the closure of coal and fossil fuel plants. It projects the country will need an additional 100 gigawatts of peak-hour electricity by 2030, with half that needed just for data centers.
Nessel and her coalition argue the report is flawed. "It uses flawed assumptions, overstates risks, and attempts to override the authority of states and regional regulators," she said in a statement reported by MLive. The coalition fears the DOE will use the report to justify keeping coal plants open under emergency orders, undermining state efforts to transition to cleaner energy. Their concerns aren’t hypothetical: DOE Secretary Chris Wright has already used such orders to keep Michigan’s J.H. Campbell coal plant running through August 21, 2025, despite plans to decommission it. Similar orders have kept plants operating in Pennsylvania, Puerto Rico, and at Duke Energy Carolina units.
The DOE now has 30 days from August 8 to respond to the coalition’s request for a hearing. The outcome could set a precedent for how much say states have in shaping their energy mix—and how quickly the country can move away from fossil fuels.
Amid this tug-of-war, the transition to clean energy faces additional headwinds. The Trump administration has signaled plans to end the "Solar for All" program, which expands access to rooftop solar, and to freeze billions in funding for electric vehicle charging stations. While legal challenges have so far kept the EV program alive, the uncertainty is rattling advocates and state officials.
Yet, not all clean energy projects are stalled. Dominion Energy’s 2.6-gigawatt Coastal Virginia Offshore Wind project remains on track for completion by the end of 2026, though tariffs imposed by the Trump administration have added $506 million to its cost, bringing the total to $10.9 billion.
For now, the outlook for electricity prices and the pace of the energy transition remains uncertain. PJM’s capacity prices could fall if market fundamentals shift, but with demand from data centers and delays in bringing new projects online, few expect relief soon. As the nation debates how to balance reliability, affordability, and climate goals, the once-obscure PJM Interconnection has become a household name—at least for those staring at higher bills and wondering what comes next.
The coming months will reveal whether state challenges and consumer pressure can reshape the rules of the grid, or if the status quo will prevail in the face of rising costs and political headwinds.