What Do the Latest ERCOT and PJM Updates Mean for Business Energy Costs?

Both the ERCOT and PJM energy markets are experiencing historic load growth, driven largely by the rise in data center electricity demand. From rising PJM capacity costs to ERCOT pricing volatility, demand is starting to outpace supply. This imbalance is putting pressure on the grid and pushing electricity costs to historic highs. Discover what’s changing in each market and how it could impact your business’s energy strategy.

ERCOT & PJM Grid Updates Every Business Owner Should Know

Both the ERCOT and PJM markets are experiencing historic load growth, with electricity demand expected to rise 10% in Texas and 3.2% across the PJM region between 2025 and 2027. As electricity demand continues to grow, strain on the power grid is pushing rates higher and leading to reliability concerns.

In ERCOT, population growth and the rapid expansion of data centers are responsible for Texas’s record-breaking demand. ERCOT is currently reviewing over 233 gigawatts (GW) of large-load interconnection requests, a 300% increase from 2024. In a high-demand scenario, wholesale electricity rates in ERCOT’s North Hub could jump up to 79% by 2027.

Meanwhile, in PJM Interconnection’s 13-state grid, there’s more access to coal and natural gas generation to help stabilize prices. However, with multiple data center hot spots in the PJM power grid, capacity costs are rising every year. In high-demand forecasts, analysts predict businesses could experience 4% rate increases by 2027.

Rising demand in both PJM and ERCOT markets means businesses need a proactive strategy to protect their bottom line.

ERCOT & PJM Grid Updates That Could Impact Your Business

Recent ERCOT News

ERCOT’s grid is facing record demand and new reliability measures that could affect business energy costs.

• ERCOT’s large-load interconnection queue has reached 233 GW, with 70% coming from data centers alone.
• ERCOT now includes no-solar scenarios in interconnection studies to plan for reliability in extreme weather conditions.
• Regulators now allow remote curtailment of large electricity users, like data centers, to protect grid reliability.
• ERCOT started conducting winter weather inspections to strengthen grid reliability during cold snaps.

Recent PJM News

PJM’s capacity and market reforms are shaping electricity prices, especially for large energy users like data centers.

• PJM’s latest capacity auction cleared at $333/MW-day, up 22% from last year.
• Data centers account for 40% of PJM’s $16.4B capacity costs, highlighting their impact on the grid.
• The capacity auction price cap has been extended, keeping costs elevated while supply and demand balance out.
• The PJM board has outlined market reform plans to integrate large loads, like data centers, more reliably and fast-track new generation projects.

ERCOT vs PJM: Key Differences That Affect Your Energy Costs

While both PJM and ERCOT grids power millions of businesses, each market has unique rules and regulations that impact energy costs. ERCOT’s energy-only market is highly sensitive to peak demand and extreme weather, while PJM has more pricing stability but faces supply-demand imbalances that drive costs. Understanding how each market works can help you make smarter energy decisions for your business.  

What’s Driving Rising ERCOT & PJM Electricity Rates?

Whether your business operates in the PJM or ERCOT grid, you’ve likely noticed higher electricity costs in 2026. Energy pricing can shift for many reasons beyond supply and demand. Here are some additional factors that can cause ERCOT and PJM energy rates to shift:

• Rapid demand growth. Expanding data centers, AI workloads, and population increases are driving higher electricity usage.
• Delays in new generation. New power plants and grid upgrades are taking longer than expected, limiting supply.
• Aging infrastructure. Older coal and gas plants are less efficient and face higher maintenance costs.
• Extreme weather events. Extreme heat, cold snaps, and storms increase demand and strain the grid.

• Policy and market changes. Shifts in environmental regulations, reliability programs, and capacity auction reform can impact rates.
• Transmission bottlenecks. Limited local generation can raise electricity prices in specific regions.
• Geopolitical tensions. Global conflicts, such as the ongoing U.S.-Iran War, can increase fuel prices, indirectly affecting electricity costs.

How PJM & ERCOT Market Trends Impact Business Energy Costs

In addition to the energy market your business operates in, your usage patterns can impact your monthly bills. High-usage businesses within the ERCOT grid, like data centers or manufacturers, feel the most impact during peak demand periods, while smaller businesses are less impacted. In the PJM power grid, business energy costs are more influenced by seasonal demand swings and the availability of local energy resources. Understanding these patterns can help your business explore strategic energy plans to manage its usage more effectively.  

Which Industries Are Most Affected by Rising Energy Costs?

Some industries feel the pressure of energy price changes more than others. These energy-intensive businesses often face much higher bills, increased volatility, and a greater need for strategic energy planning and management.

Manufacturing

Manufacturers rely on energy-intensive equipment and machinery, making electricity one of their highest operating costs. If not carefully managed, peak demand periods can significantly increase monthly expenses and disrupt production cycles. That’s why many industrial and manufacturing facilities rely on energy management systems and demand response to keep costs predictable.

Food Service

Commercial kitchens in restaurants, cafes, and fast food establishments require a lot of power for refrigeration, cooking, and HVAC systems. The busiest hours of operation often fall within peak demand periods, making smart scheduling crucial to managing costs. Many food service businesses rely on fixed-rate energy plans to make their utility bills more predictable.

Data Centers

In data centers, servers and cooling systems run 24/7 to meet our technology needs, making them particularly sensitive to fluctuating energy costs. In PJM and ERCOT, long interconnection queues can delay new data centers from coming online, increasing development and operational costs. In order to offset unpredictable energy costs, many operators prioritize energy-efficient equipment and on-site renewable energy solutions.

ERCOT vs PJM: Best Business Energy Procurement Strategies

Choosing the right type of energy plan can help your business stabilize energy costs and find cost-saving opportunities over time. However, your energy procurement strategy should be tailored to your energy market. Here’s how to approach energy procurement in ERCOT and PJM based on current market conditions.

Best Energy Plans for Businesses in ERCOT

In ERCOT’s energy-only market, electricity prices can change within minutes, so businesses with more flexible usage often prefer the savings opportunities of index, hybrid, or time-of-use plans. These options can help businesses take advantage of lower-price periods while still managing the risk that comes with sudden rate changes. Texas companies that prefer price protection and predictability often choose fixed-rate plans to protect against volatility.

Best Energy Plans for Businesses in PJM

Since PJM’s capacity market secures power in advance, many businesses prefer fixed-rate plans for long-term stability and predictable bills. In this market, timing your contract around PJM’s capacity auction schedule can help you lock in low, stable rates before pricing changes take effect. Businesses in PJM should start shopping early to lock in the most competitive terms rather than waiting for the market to reset.

How to Protect Your Business from Energy Price Volatility

Energy market shifts don’t have to catch your business off guard. Take control of your energy costs today by locking in a fixed rate or shifting your usage to off-peak hours. You can also maximize your long-term savings by upgrading to energy-efficient equipment, participating in demand response programs, or partnering with an energy expert. At Price to Compare, we make it fast and easy to take control of your energy costs. Our online marketplace offers side-by-side plan recommendations from the best suppliers in your area, so you can trust that you’re always getting the best deal.

Frequently Asked Questions About PJM & ERCOT Energy Market Changes

How often do energy rates change in ERCOT and PJM?

Energy rates can change frequently in both ERCOT and PJM markets. In ERCOT’s energy-only market, electricity rates can update hourly as they react to supply and demand in real time. In PJM, electricity rates are generally more stable; however, PJM capacity auctions and seasonal demand often lead to larger annual rate changes.

Are certain PJM states seeing higher energy cost increases than others?

Yes! PJM energy prices vary by state due to differences in local utility rates, transmission costs, local energy resources, and how each state participates in the deregulated market. States like New Jersey, Delaware, and Maryland have higher population densities and often rely on imported energy resources, so their electricity costs are typically higher.

What is the Capacity Auction in PJM?

PJM capacity auctions are held every year to ensure there’s enough electricity on the grid to meet future demand. During the auction, generators and suppliers offer their available capacity, and PJM regulators set prices based on this supply and forecasted demand. An imbalance of supply and demand leads to capacity cost increases, while a more balanced grid keeps these costs stable.

How reliable is the ERCOT grid during extreme weather?

ERCOT has historically faced challenges with extreme weather, especially during heatwaves or unexpected winter storms. While the grid is generally stable and reliable, sudden demand spikes or outages can lead to price spikes. Programs like demand response help ERCOT manage unexpected grid conditions and help reduce pricing volatility during extreme weather events.

How does ERCOT’s energy-only market impact business energy costs?

ERCOT doesn’t have a separate capacity market, so Texas electricity prices are driven purely by real-time supply and demand.  When demand is high, electric rates can rise quickly, which can lead to expensive energy bills if your business is on a variable or time-of-use plan. Fortunately, fixed-rate plans can provide businesses with long-term price protection and predictable bills.

Is there a best time of year to renew or switch energy plans in ERCOT and PJM?

Yes! Both ERCOT and PJM experience seasonal energy rate fluctuations, so the ideal time to lock in a new rate is during low-demand seasons. The mild weather in spring and fall lowers regional demand, leading to some of the lowest rates all year long. However, you don’t have to wait to lock in a low rate. The Price to Compare marketplace gives you access to the best energy prices in your area, no matter the season!