What Happened in the 2024 BRA
In July 2024, PJM Interconnection conducted its Base Residual Auction (BRA) for the 2025/2026 delivery year — the annual auction that determines how much generators get paid for committing to be available during peak demand periods. The clearing price for most of the PJM footprint came in at $269.92/MW-day.
The prior year's auction had cleared at approximately $28/MW-day. That's not a typo. The 2024 BRA delivered an 864% year-over-year increase in the capacity price that flows through to every commercial and industrial electricity customer in the region.
Why It Happened
Three structural forces converged simultaneously to produce this result:
1. Generator retirements outpaced new entry
PJM has seen the retirement of significant baseload generation — primarily coal and nuclear — over the past decade. While renewable additions have increased substantially, the intermittent nature of wind and solar creates a gap in dispatchable capacity. The BRA clearing price reflects what it costs to retain the generators still willing to commit firm capacity.
2. PJM's capacity market reform (MOPR changes)
PJM's market design changes affecting how state-subsidized resources (offshore wind, nuclear zero-emission credits) are treated in the capacity market removed a significant block of supply from prior auctions. With less supply competing, the clearing price rose to find equilibrium with demand.
3. Demand forecasts increased
Data center growth across the PJM footprint — particularly in Northern Virginia — drove meaningful upward revisions to long-term load forecasts. Higher expected peak demand means the market needs more committed capacity, which supports higher clearing prices.
The practical result: If your peak demand is 1 MW, your annual capacity cost at the 2024/25 BRA rate is approximately $98,600 ($270/MW-day × 365 days). At the prior year's rate, that same 1 MW cost about $10,220. For a 5 MW account, the difference is $443,000 per year.
How Capacity Costs Flow Through to Your Bill
Capacity costs don't appear as a line item labeled "BRA charge" on most utility bills. They're embedded in your supply contract, your utility's default service rate, or both — depending on how your account is set up.
| Supply Arrangement | How Capacity Cost Flows Through | Your Exposure |
|---|---|---|
| Fixed-rate contract, capped capacity | Supplier absorbs BRA increase above cap | Low |
| Fixed-rate contract, uncapped pass-through | BRA increase passes directly to customer | High |
| Index / pass-through contract | BRA increase passes directly to customer | High |
| Utility default service | Embedded in regulated rate, adjusted periodically | Medium-High |
| Block & Index (hybrid) | Depends on fixed vs. index split and capacity terms | Varies |
The most common scenario we see: a customer who signed a fixed-rate contract believing their costs were locked, but whose contract contained uncapped capacity pass-through language buried in the schedule of charges. These accounts received surprise bills beginning June 2025 with no advance notice from their supplier or broker.
Warning: "Fixed rate" does not mean "fixed total cost." Most supplier contracts fix the energy supply component while passing through regulated charges — including capacity — separately. Always read the full schedule of charges, not just the headline rate.
Your PLC Tag: The Multiplier You Control
The capacity cost you pay isn't based on your nameplate demand or your average load. It's based on your Peak Load Contribution (PLC) tag — specifically, what you consumed during the five highest-load hours across the PJM system during the prior summer. These five hours are called the 5 Coincident Peaks (5CP).
Your PLC tag is the key variable that determines your individual capacity cost exposure. If your tag is 2 MW and you reduce it to 1.4 MW through proactive curtailment during 5CP hours, your capacity cost drops 30% — regardless of what the BRA price does.
This is one of the most impactful and most overlooked levers available to C&I accounts. Most suppliers and many brokers never mention it.
Contract Language That Protects You
Going into your next supply contract negotiation, here's what to ask for — and what to watch out for:
Ask for:
- Capacity cost cap or fixed adder: A specific $/kW-month cap on the capacity component, or a fully fixed capacity adder built into the rate
- Transparency on all non-bypassable charges: Request a fully-loaded rate quote that explicitly shows energy, capacity, transmission, and ancillary components
- Material change clause: Language allowing early exit if regulated charges increase beyond a defined threshold (typically 15–20%)
- PLC tag methodology: Confirmation of exactly how your tag is calculated and when it will be updated
Watch out for:
- "All applicable regulatory charges passed through at cost" — this passes BRA increases directly to you
- Capacity adders quoted as estimates only ("subject to change based on auction results")
- Short-term contracts (6–12 months) entered during periods of BRA uncertainty
- Brokers who present only the energy supply rate without modeling total bill impact
The right benchmark: When comparing supplier quotes, always normalize on a fully-loaded $/kWh or $/month basis, including energy, capacity, transmission, and ancillaries. A 0.5¢ lower energy rate can be offset entirely by a worse capacity adder for a mid-sized commercial account.
What to Do Right Now
Regardless of when your contract renews, there are three actions that apply to every C&I account in the PJM footprint today:
- Pull your interval data and calculate your current PLC tag. If you don't know what your tag is, you don't know your full cost exposure. Request 15-minute interval data from your utility and identify your load during the five peak hours from last summer.
- Implement a 5CP curtailment protocol before this summer's peak hours. 5CP hours typically occur during hot, humid weekday afternoons in July and August. Advance notice systems (available through PJM or third-party monitoring) can alert you 24–48 hours ahead.
- Review your current contract's capacity pass-through language. If you have an uncapped pass-through, model your exposure at the current BRA price and factor that into your next renewal decision.
The Bottom Line
The 2024 BRA was not an anomaly. PJM's capacity market will remain volatile as the grid transitions and load growth continues. The accounts that manage this cost proactively — through PLC tag reduction, strategic contract structuring, and demand response enrollment — will have a meaningful and durable cost advantage over those that don't.
If you'd like a detailed analysis of your account's current capacity cost exposure and a model of what PLC tag reduction would save you, we offer that at no cost. There's no obligation, and the analysis takes 48 hours.