PJM posted the results of its 2027/2028 Base Residual Auction (BRA) on December 17, 2025. As widely expected, the auction cleared at the price cap of $333.44/MW-day across the RTO.

Absent the recently adopted collar structure, the clearing price would have reached an estimated $529.80/MW-day, which would have added another $10 billion to customer bills. With that backdrop, it is unsurprising that stakeholders are already calling for the collar mechanism (cap and floor) to be extended into the next auction, scheduled for June 2026 and applicable to the 2028/2029 delivery year.

Looking Back: July’s “Catch Up with KC” Webinar Was Directionally Right

During CPV Retail’s webinar at the end of July, Dan Jerke, Vice President of Energy Management at CPV, shared his outlook for the December 2025 auction, alongside Khristian Camacho (KC), Vice President of Pricing at CPV Retail. In that discussion, predicted clearing prices were noted as in the mid-$330s, just slightly higher than the $333.44/MW-day outcome.

Demand-side pressures continue to intensify, led by:

• Large load additions, particularly data centers
• Consistent load growth across zones, with certain states emerging as data center hubs
• A PJM load outlook that remains structurally strong

On the retail side, KC emphasized the importance of the zonal scaling factor. If load forecasts continue to undershoot actual outcomes, customers may continue to see relatively favorable scalers in the near term. However, longer-term capacity increases will be required as load growth proves durable.

Key Parameter Changes Driving the 2027/2028 Results

Several material changes from the prior BRA directly influenced this year’s clearing outcome:

1. RTO Reliability Requirement increased from 146,105 MW to 152,400 MW (UCAP)
2. Forecasted load increased by 5,249.9 MW, driven largely by new large loads
3. Forecasted peak load rose to 164,579 MW, a ~5,250 MW increase
4. Installed Reserve Margin (IRM) increased from 19.1% to 20.0%, reflecting heightened winter outage risk

The Market’s Core Challenge: Long-Term Signals vs. Political Reality

The fundamental conundrum facing PJM and the broader market remains unresolved: How do you send appropriate signals to power plant developers who need transparency in longer-term capacity prices to support financing of new dispatchable resources, while meeting the requirements of the current regulatory environment?

Several mechanisms are currently under evaluation; however, none have yet met the state and federal requirements while maintaining effective market operations in the face of politically sensitive outcomes requiring ongoing intervention.

Looking Ahead to June: A Potential Inflection Point

The real work begins now. The June 2026 BRA for the 2028/2029 delivery year could prove to be a pivotal point for the market. If that auction produces an uncapped outcome, it may test the political and regulatory tolerance for sustained high-capacity prices — and accelerate the push for further structural reforms.

For now, the collar era may or may not be extended. Whether it remains in place — and whether it remains sufficient — is the next question the market will have to answer.