Electricity prices are climbing across the PJM region, and many consumers are asking why. The answer isn’t simple—but it’s also not what some might think. Rising bills are not being driven by state clean-energy mandates or Renewable Energy Portfolio Standards. Instead, they reflect a deeper imbalance in PJM’s power markets, where electricity demand is growing faster than new supply can come online. Interconnection delays, local permitting challenges, and supply-chain disruptions have slowed the addition of new clean-energy projects that could help moderate prices. This blog explains this dynamic in detail, which is key to shaping policies that keep energy affordable while expanding the region’s clean-energy future.
Unpacking Rising Electricity Prices
At the state level, the primary renewable energy incentives come in the form of Renewable Energy Portfolio Standards (RPS) requiring a growing portion of a state’s electricity to come from renewable energy sources. These policies support private investment in solar, wind and other clean energy resources, which are needed now more than ever.
Wholesale energy and capacity price increases across PJM, caused by a growing imbalance of supply and demand (including forecasted future demand), are the primary driver of cost increases felt by consumers—not RPS or other clean energy policies. However, the undersupply of clean energy in PJM is contributing to the cost of meeting RPS policies. PJM reformed the process to connect projects to the grid over the last several years, and this freezing of the “queue” (along with local permitting denials and supply chain issues) prevented many clean energy projects from coming online.
Wholesale price increases are quantified in an October report from PJM’s Independent Market Monitor. The chart below shows that energy prices have increased by the largest amount in absolute terms and capacity prices have increased the most in percentage terms. Energy prices are best moderated by the addition of zero marginal cost, fuel-free resources like solar and wind. The increase in capacity costs reflects a market signal being sent by PJM to increase the availability of high ELCC resources (such as energy storage, offshore wind, natural gas, and nuclear).
Wholesale prices in PJM have an impact on retail prices paid by consumers, though it is not always direct due to utility ratemaking proceedings and other factors.
Recent research from Lawrence Berkeley National Lab (LBNL) provides some helpful context on how these wholesale increases are translating into retail rates.
- LBNL finds that state RPS policies have, at most, increased retail rates by ~1 cent/kWh from 2019 to 2024. The biggest impacts at 1 cent/kWh are felt in Maryland and New Jersey. Pennsylvania has seen rates increase due to RPS policies by 4/10ths of a cent/kWh.
- Outside of the Northeast, increases related to RPS policies have been smaller or represent cost savings. We suspect this difference is a result of a dramatic undersupply of Renewable Energy Credits (RECs) in PJM and the Northeast in general. RECs enable electricity suppliers to comply with RPS policies. Due to interconnection queue reform efforts conducted by PJM, the queue had been frozen for the last several years and interconnection delays (along with local permitting denials and supply chain issues) prevented many clean energy projects from coming online during this period to supply additional energy, capacity and RECs.
- In its announcement of the 2025 Basic Generation Service auction results, the New Jersey Board of Public Utilities reported that residential ratepayers can expect to face monthly increases of over $20 compared to previous bills, with percentage increases ranging from 17.2% to 20.2%, depending on the utility. The BPU assumes an average monthly usage of 650 kWh, which means that wholesale price increases in PJM are having an effect more than four times greater than RPS related costs in New Jersey.
- In Maryland, the Office of People’s Counsel (OPC) estimated that the average increase on residential customers’ monthly bills would be between $4-18 due to the PJM capacity auction alone.
- In Pennsylvania, the utility PPL increased their price-to-compare in June 2025 by almost 16% relative to prices for the previous six months for residential and C&I customers. Other utilities saw similar increases. Notably, Pennsylvania’s Alternative Energy Portfolio Standard (essentially the Commonwealth’s version of an RPS) has been unchanged for several years and is not responsible for these increases.
- Because the PJM wholesale price increases relate to a fundamental lack of supply, RPS and similar policies to incentivize clean energy resources would address the root cause of price increases and stabilize rates for consumers over time.
- Market forces, not clean energy policies, have been the single largest driver of retirements for older, inefficient coal, gas and nuclear facilities.
As PJM and state leaders work to address these rising costs, one message is clear: expanding clean energy is part of the solution, not the problem. Bringing more solar, wind, and storage projects online will increase supply, reduce volatility, and strengthen reliability for consumers. MAREC continues to advocate for policies that remove barriers to project development, accelerate interconnection reforms, and ensure the region’s energy transition delivers affordable, and reliable power.