Electric bills for residents in Chesapeake Bay drainage states could rise as much as 24% now that wholesale electricity prices rose to record levels at an auction that locked up guaranteed power during extreme weather events in the region.

The spike in the price to reserve power for air conditioning and heating emergencies in 2025–2026 was more than nine times the previous record.

Renewable energy advocates say the shocking hikes at the July auction were avoidable, and they blame PJM Interconnection, the regional grid operator, for dragging its feet in incorporating solar energy, wind power and battery storage projects into the mix.

PJM countered that the escalated price was the result of market forces, swelling energy demand from data centers and federal government reforms.  

Exactly how much the higher wholesale prices will drive up electric bills for consumers depends on their power company and location in the grid.

According to estimates from Maryland’s Office of People’s Counsel, residential customers of Baltimore Gas and Electric could see their bills increase by 15%.

Ratepayers in the Allegheny Power System, which includes part of Potomac Edison, may see a 24% rise. Pepco customers could see a 10% hike, while ratepayers in Delmarva Power’s southern zone might see only a 2% rise.

Exelon, which has customers in Maryland, Pennsylvania, Delaware and the District of Columbia, said it expects “significant” rate increases but gave no specifics. PPL, formerly Pennsylvania Power and Light, projected that residential bills would rise $10 to $15 per month.

Dominion Energy, in contrast, said ratepayers will mostly be insulated from higher bills because the company owns power plants that benefitted from the higher prices paid for reserved power.

The new rates for all the utilities and their 65 million customers go into effect in June 2025.

The sticker shock has sparked finger pointing between environmental and clean energy groups, and PJM — the nation’s largest grid operator, controlling the flow of electricity and wholesale power prices in 13 states and the District of Columbia.

The groups blame PJM for permit backlogs that are keeping hundreds of cheaper wind power, solar energy and battery storage projects from infusing the grid with new power sources. Some 97% of projects in PJM’s backlog are renewable energy.

PJM has also been criticized for not planning adequate transmission lines to distribute power from the large bank of renewable energy projects when they come online.

Critics say consumers will have to pay more because of the failure of gas and coal sources to generate promised power during extreme cold from Winter Storm Elliott in 2022, which came close to causing rolling blackouts.

Some 63% of “guaranteed” power from gas-fired plants and 28% of coal-fired plants couldn’t produce power during that storm because of frozen equipment and supply problems. Solar, wind, nuclear and hydroelectric sources, meanwhile, performed well, according to PJM.

As a result of the delivery failure, the Federal Energy Regulatory Commission subsequently downgraded their reliability, driving up the cost paid for guaranteed power in PJM’s power auction in July.

“PJM fell behind on interconnection and long-term transmission planning years ago, and now the problems are just cascading and piling up,” said Jon Gordon, director of Advanced Energy United, a renewable energy association of businesses.

John Quigley, a senior fellow at the University of Pennsylvania’s Kleinman Center for Energy Policy, thinks it’s time policymakers demand a decarbonized grid and put pressure on PJM to stop relying so heavily on gas-fired plants.

“The energy mix saddling PJM customers and their wallets reflects a failure to adequately plan and act to diversify the resource mix to ensure an affordable and reliable power grid,” Quigley said.

PJM said that the record high prices for electricity were caused by a combination of retired coal power plants and increased demand for electricity from data centers, manufacturing and electric vehicles, as well as federal market reforms requiring improved performance from fossil fuel power sources during weather anomalies.

Responding to criticism of its renewable energy backlog, PJM said it has reforms in place. And it noted that significant renewable energy projects have received permits but have not been built because of “external challenges, including financing, supply chain and siting/permitting issues.”

“The significantly higher prices in this auction confirm our concerns that the supply/demand balance is tightening. The market is sending a price signal. That should incentivize investment in resources,” said PJM president and CEO Manu Asthana.

The dramatic spike in weather-related power generation and fears of inadequate power are already prompting moves by PJM and the Pennsylvania legislature.

Fearing a shortage of power in the entire grid, PJM is paying Talen Energy to keep running its two fossil-fuel-powered power plants on the Patapsco River south of Baltimore until at least 2028. Talen had previously announced it would close the plants in mid-2025. BG&E customers are expected to pay 5% higher bills to keep the plants open, on top of bill increases from the higher wholesale prices.

In Pennsylvania, Republican State Sen. Gene Yaw, a natural gas advocate, said he will be introducing a bill to create a multibillion-dollar revolving fund to offer low-interest loans for building more gas-fired power plants in the state.

“Pennsylvania has significant natural gas supplies to fuel power plants,” he said. “I think the handwriting has been on the wall for a couple years as to where things are going to go. The PJM auction just kind of confirmed what a lot of people have been talking about with the supply situation.”