CPV RETAIL BLOG

July 10, 2025

Upcoming 2026/2027 PJM BRA Auction: Managing Risk in a Changing Energy Landscape

The 2026/2027 BRA opened on July 9, closes on July 15, with results to be released on July 22, and yet there is still a lot riding on the outcome, regardless of the scripted results.

Given the agreement to implement a collar structure providing a floor price and a cap price applicable to the next two PJM BASE Residual Auctions (BRA), one might imagine that the impending uncertainty for the upcoming auction has lessened; however, there is still more to be determined.

The 2026/2027 BRA opens July 9, closes July 15, with results released on July 22, and yet there is still a lot riding on the outcome, regardless of the scripted results.

PJM is still seeking to solve the major contributors underpinning the most recent results, which started flowing through customer electric bills on June 1, to which CPV Retail issued partner communications for how to treat Capacity Cost impacts (For questions, please contact your Account Manager.)

As dispatchable resources retire and demand rises, we need a diverse mix of energy sources to keep the grid reliable. Interestingly, renewable projects comprise most new interconnect requests; however, the recently streamlined process implemented by PJM has led to an increase in gas plant requests.

However, new thermal generation projects are more costly than previous projects, due to significant increases in both debt and equipment costs. Recent hourly price volatility experienced in the Dominion LDA points towards escalating demand growth, primarily coming from the datacenter buildout. It seems every time temperatures in Loudon County, Virginia, move above 80 degrees, hourly prices spike.

These issues may take time to resolve, making price exposure management crucial due to the risk/reward considerations. Close coordination with CPV Retail representatives can facilitate a better understanding of the regulatory and market exposures and help create a strategy to minimize aggregate risk.

To help unpack the upcoming BRA Auction Results for 2026/2027, CPV Retail is holding a webinar on July 29th at 2 pm CT/3 pm ET, so mark your calendar and register for the session here to stay informed. In the meantime, our team is here to help answer your questions.

Note: Webinar is dependent on the auction remaining on schedule.

PJM Regulatory Review

PJM Regulatory Review

  • The FERC conference, held on June 4-5, which focused on Resource Adequacy in developed RTO markets, came away with no specific recommendations on how to deal with the tight supply/demand balance.

  • PJM issued Hot Weather Alerts for different regions of its service territory on July 6 and July 7 in anticipation of hot and humid conditions, which typically drive up electricity demand.

Market Drivers

  1. Gas Storage/Year over year difference. A positive number is bearish, and a negative number is bullish.
  2. Production /Year over year growth/trend is important in the context of demand growth.
  3. LNG Exports/Year over year growth means demand is growing and should be looked at in comparison to production trend.
  4. Mexican Exports/Add to LNG Exports to show a trend in exports compared to the production trend.
  5. PJM Outages- generally seasonal in Spring or Fall/Can support short-term prices.
  6. Gas Focused Rig Count/Is drilling increasing to grow production versus demand growth. This can be seen as impacting price in the future based on expected load growth.

Energy Market Update

  • Talen and Amazon expanded their relationship with a long-term power sales agreement committing virtually all the output of the Susquehanna nuclear (1,920 MW) out through 2042 with an extension option. The power will support Amazon’s co-located data center facility in Pennsylvania.
  • As summer temperatures in Asia escalate, attracting greater LNG flows to the region, it will be increasingly important for Europe to maintain a robust pace of storage injections to ensure adequate winter preparedness.
  • PJM load surpassed 160,000 MW for several consecutive days in late June.
  • The former Three Mile Island Unit 1 (now renamed Crane Clean Energy Center) may restart in 2027 (one year earlier than previously announced). The restart is supported by a 20-year power purchase agreement with Microsoft, which will use the electricity to power its data centers.
  • Oil inventories have declined for 5 consecutive weeks, supporting demand.
  • China’s LNG demand has declined for 8 straight months, impacted by cheaper pipeline gas and increased domestic production.

Forward Pricing

Renewable Energy