EAGLEVILLE, PA — PJM Interconnection’s wholesale electricity markets produced competitive results in 2025, though its capacity markets did not, according to a report released by Monitoring Analytics, the grid operator’s independent market monitor.
The 2025 State of the Market Report, presented by Independent Market Monitor Joseph Bowring, evaluates market structure, participant behavior, and performance across PJM’s service area, which spans 13 states and the District of Columbia.
“Our analysis concludes that the results of the PJM Energy Market were competitive in 2025,” Bowring said. He added that capacity market auctions for upcoming delivery years “were not competitive, in significant part as a result of forecast demand for data centers.”
The report found that real-time energy prices increased significantly, with the load-weighted average locational marginal price rising 50.4 percent from $33.74 per megawatt-hour in 2024 to $50.73 per megawatt-hour in 2025.
Fuel and consumables accounted for the largest share of the increase, followed by transmission constraint costs and market power components, according to the report.
Total wholesale power costs also rose, increasing 48.9 percent from $55.52 per megawatt-hour in 2024 to $82.67 per megawatt-hour in 2025.
Energy, capacity, and transmission costs made up nearly all wholesale power costs, with capacity costs increasing more than 260 percent year over year.
The report found that energy prices were generally set by units operating near their short-run marginal costs, which Bowring said indicates “generally competitive behavior and competitive market outcomes,” though some higher markups affected prices.
Electric demand increased in 2025, with average real-time load rising 3.7 percent compared with the previous year, and PJM recording new winter and summer peak loads.
Generation patterns shifted, with coal output rising 19 percent and solar generation increasing 41.2 percent, while natural gas generation declined slightly, the report said.
Energy market net revenues increased across multiple generation types, including natural gas, coal, nuclear, wind, and solar facilities, reflecting stronger incentives for investment.
The report also identified rising costs related to transmission congestion, which increased 80.9 percent to $3.17 billion in 2025.
Only 59.4 percent of congestion costs paid by customers during part of the current planning period were returned, the report said, citing issues with financial transmission rights market design.
Customers have received $5.8 billion less in congestion revenue than expected since the 2011/2012 planning period, according to the analysis.
Total energy uplift charges also increased sharply, rising 184.6 percent from $268.6 million in 2024 to $764.5 million in 2025.
The report is available at https://www.monitoringanalytics.com/reports/PJM_State_of_the_Market/2025.shtml.
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