PJM Capacity Increases: What Small Businesses Need to Know

3 Min Read

If you’ve been keeping an eye on the energy market, you might have noticed some significant changes coming down the pipeline, particularly in the PJM Interconnection. For those not in the know, PJM is the regional transmission organization that coordinates the movement of wholesale electricity in parts of the Eastern United States. Recently, PJM announced a substantial increase in capacity prices, and this shift is set to have a ripple effect across the board, especially for small businesses.

What’s Happening?

In the latest capacity auction, PJM saw record-high prices, driven by a combination of factors including plant retirements, rising demand, and changes in market rules1. The Installed Reserve Margin (IRM) also saw a significant jump, indicating increased concerns over grid reliability¹. Essentially, PJM is trying to ensure there’s enough electricity to meet future demand, but this comes at a cost.

Why Should Small Businesses Care?

Higher capacity prices mean higher electricity bills. For small businesses operating on tight margins, this can be a significant burden. Unlike large corporations, small businesses often lack the resources to absorb these increased costs without passing them on to customers or cutting back in other areas.

What Can Small Businesses Do To Navigate These Rising Costs?

Energy Audits: Conducting an energy audit can help identify areas where energy use can be reduced. Call your Small Business sales representative to set up an in-person consultation.

Energy Efficiency: Investing in energy-efficient equipment and practices can help reduce overall consumption. This might include upgrading to LED lighting, improving insulation, or investing in energy-efficient HVAC systems.

Demand Response Programs: Participating in demand response programs can provide financial incentives for reducing electricity use during peak times. This not only helps manage costs but also supports grid stability. Contact your AEP Energy consultant to learn more our Demand Management program.

Renewable Energy: Exploring options for on-site renewable energy generation, such as solar panels, can reduce reliance on the grid and provide long-term savings.

Looking Ahead

The energy landscape is evolving rapidly, and small businesses need to stay informed and proactive. That’s why AEP Energy is here to help. While the increase in PJM capacity prices presents challenges, it also underscores the importance of resilience and adaptability in today’s market. By taking steps to manage energy use and explore alternative solutions, small businesses can not only mitigate the impact of rising costs but also position themselves for long-term success. To learn more: Understanding Capacity Increases | AEP Energy

¹PJM Capacity Prices Skyrocket: Impact on Businesses and the Grid

AEP Energy does not guarantee the accuracy, timeliness, suitability, completeness, freedom from error, or value of any information herein. The information presented is provided “as is”, “as available”, and for informational purposes only, speaks only to events or circumstances on or before the date it is presented, and should not be construed as advice, a recommendation, or a guarantee of future results. AEP Energy disclaims any and all liabilities and warranties related hereto, including any obligation to update or correct the information herein. Summaries and website links included herein (collectively, “Links”) are not under AEP Energy’s control and are provided for reference only and not for commercial purposes. AEP Energy does not endorse or approve of the Links or related information and does not provide any warranty of any kind or nature related thereto.