… had recently issued several peak generation and load management alerts this summer as the heat pushes energy demand to the brink and air conditioners run at full capacity across the eastern United States.

But as anyone who hasn’t been living under a rock knows, the deeper problem is that there simply isn’t enough baseload power in new data centers to feed the relentless, hungry growth of server racks with energy-hungry AI. 

“There’s just not enough new capacity to handle the new loads,” Joe Bowring, president of Monitoring Analytics, an independent watchdog for PJM Interconnection, told Bloomberg. “The solution is for people who want to build data centers to get serious enough about it to generate their own electricity.”

Well, there’s another solution: raise prices into the stratosphere. 

And that’s exactly what happened. As Bloomberg reports, businesses and households served by the largest U.S. power grid are paying $16.1 billion to ensure they have enough electricity to meet growing energy demand, especially with the massive expansion of artificial intelligence data centers.

According to PJM Interconnection LLC, which operates the power grid that stretches from the Midwest to the Mid-Atlantic, payments to generators for the year that begins in June 2026 surpassed last year’s record $14.7 billion. That puts the price per megawatt per day at a record $269.92 to $329.17.

In response to the large payout, shares of Constellation Energy and Talen Energy rose late Tuesday on the New York Stock Exchange.

As millions of Americans will soon learn the hard way, AI data centers are driving the biggest jump in U.S. electricity demand in decades, leading to higher residential utility bills. That’s a key reason why the PJM auction, once watched only by power traders and power plant owners but now increasingly a topic of general consumption as electric bills reach all-time highs, is also being closely watched by politicians and consumer groups. 

As Bloomberg notes, this is the first auction to  include both a floor and a ceiling, setting the range at $177.24 to $329.17, which was, of course, the clearing price achieved in that auction. Why even pretend there’s an auction: just set the price at the maximum and you’re good to go. Last year’s 600% jump in capacity prices triggered a political storm, resulting in PJM reaching an agreement with Pennsylvania Governor Josh Shapiro that essentially capped its profits for two years and made auction prices more predictable after the wild swings of recent years.

Despite rising grid costs, the price cap reduced costs for consumers whose rates rose the most in the previous auction. Exelon’s Baltimore-area utility’s price last hit $466, while Dominion Energy’s Virginia-area price was around $444.

Generator payments have remained high, thanks to the rapid growth in demand from large data centers, said Jon Gordon, policy director at Advanced Energy United, a nonprofit clean energy advocacy group. New facilities are consuming as much energy as cities or towns, coinciding with a wave of older power plant closures and a lag in investment in new equipment and grid upgrades, he said.

Barclays analyst Nick Campenella predicts that the megawatt price will surpass the 2024 auction price and close at an all-time high, which is bullish for independent power producers including NRG, Talen, Constellation and Vistra. These producers have spent more than $34 billion in deals this year to buy mostly natural gas-fired power plants to fuel the AI boom, particularly in PJM.